Paytm Parent Cannot Sell Wallet Business. Here's Why
The RBI found major supervisory concerns and persistent non-compliance from the company's payment banks.
One97 Communications Ltd. cannot sell the wallet business of Paytm Payments Bank as recent restrictions on its activities by the central bank does not allow transfer of business, according to a person with knowledge of the matter, who spoke on condition of anonymity.
This comes amid media reports of Reliance Industries Ltd.'s arm Jio Financial Services Ltd. and HDFC Bank Ltd. being leading contenders to acquire the wallet business of crisis-hit Paytm, causing a surge in Jio's stock on Monday.
The parent company had surrendered its pre-paid payment instruments licence (that allows wallet services) when it received the payments bank licence from the Reserve Bank of India, the person quoted above said. Thus, it cannot sell its wallet business to another entity.
The RBI found major supervisory concerns and persistent non-compliance from the company's payment banks and, on Jan. 31, restricted Paytm Payments Bank from undertaking any fresh deposit or credit transactions from Feb. 29. After this, One97 Communications said it would be working only with other banks and not its own payment banks.
Shares of the Vijay Shekhar Sharma-founded company fell as much as 10% to Rs 438.50 apiece, to be locked in the lower circuit on Monday.
Adding to the troubles, there were media reports claiming that the Enforcement Directorate was investigating the company for money laundering activities. However, the company clarified in an exchange filing on Sunday that the ED is not holding any such investigations on the company, its founders or the CEO.
