Paytm share price will be in focus on Tuesday after the fintech giant informed that its founder Vijay Shekhar Sharma has resigned from the board of its associate Paytm Payments Bank.
One97 Communications, the parent company of Paytm, on Monday said that it has withdrawn its nominee from the Paytm Payments Bank Board and Vijay Shekhar Sharma has stepped down as Part-Time non-executive Chairman and Board member to enable the reconstitution of the board.
Srinivasan Sridhar, former chairman of Central Bank of India, retired IAS officer Debendranath Sarangi, former executive director of Bank of Baroda Ashok Kumar Garg, and retired IAS Rajni Sekhri Sibal have joined the board of Paytm Payments Ban as independent directors.
Additionally, the board has former Executive Director of Punjab & Sind Bank Arvind Kumar Jain as Independent Director and Surinder Chawla, MD & CEO at Paytm Payments Bank, the company said in a release.
The Reserve Bank of India (RBI) has imposed major business restrictions on Paytm Payments Bank, restricting it from accepting fresh deposits and doing credit transactions after March 15.
The banking regulator has advised the National Payments Corporation of India (NPCI) to examine a request by One 97 Communication to become a Third-Party Application Provider (TPAP) for the UPI channel, for the continued operation of the Paytm UPI app.
It has also asked NPCI to facilitate four to five banks, with an ability to process high volumes of UPI payments, to act as service providers to Paytm. If approved, this would allow Paytm to continue processing payments via UPI, but will need a set of newly identified banks to back the app.
RBI’s this move led to a rally in Paytm stock price on Monday. Paytm shares ended at 5% upper circuit at ₹427.95 apiece on the BSE.
Global brokerage firm Morgan Stanley sees the above move by RBI as a positive development and believes that approval from NPCI would ensure quick migration of Paytm’s UPI customers, resulting in limited disruption or challenges to its business operations and user engagement over the medium term.
It will also limit the potential impact on Paytm’s non-payment business operations, Morgan Stanley said.
According to Goldman Sachs, NPCI’s approval of Paytm to operate as a TPAP, would enable it to retain majority of its MTU base, and consequently continue its ability to monetize such users by cross-selling other products.
Paytm share price has plunged nearly 44% in the past one month and is down over 52% in three months. In 2024 so far, Paytm stock price has fallen more than 32%.
