Vijay Shekhar Sharma meets FM Nirmala Sitharaman amid Paytm crisis, says report

Amidst a significant crisis for Paytm Payments Bank, Vijay Shekhar Sharma, the CEO of the fintech giant Paytm, met with Finance Minister Nirmala Sitharaman, ANI quoted sources as saying. 

This meeting came in the wake of the Reserve Bank of India's (RBI) stringent directive issued on January 31, which mandated an immediate halt to the onboarding of new customers by Paytm Payments Bank and called for a cessation of its key banking services post-February 29.

The RBI's decision was rooted in "persistent non-compliances and continued material supervisory concerns" identified within the bank. As a result, Paytm Payments Bank was also instructed to stop additional deposits, withdrawals, and top-ups across various customer-related financial instruments, including wallets, accounts, prepaid devices, and National Common Mobility Cards (NCMC).

This regulatory action has had a profound impact on Paytm, with shares of its parent company, One97 Communications Ltd, experiencing a precipitous drop. Over just two days, from January 31 to February 2, 2024, the company's market capitalization diminished by Rs 17,378.41 crore, reflecting a 36 percent decline in share value.

In response to the RBI's orders, Paytm sought an extension of the February 29 deadline and clarity regarding the transfer of licenses for wallet business and FASTag operations. However, no resolution or remedial measures were decided upon during the meeting between Sharma and RBI officials.

The crisis has prompted a group of founders to reach out to RBI Governor Shaktikanta Das and Finance Minister Sitharaman, requesting a review of the regulatory actions imposed on Paytm Payments Bank. They emphasized the need for a reassessment of the restrictions' proportionality, considering the potential repercussions for the payments bank, the fintech ecosystem, and the broader economy. They also advocated for an opportunity for Paytm to rectify the deficiencies and demonstrate compliance.

Despite the challenges, Paytm has issued clarifications stating that neither the company nor Vijay Shekhar Sharma is under investigation for any Enforcement Directorate probe or Foreign Exchange Management Act (FEMA) violations. Additionally, rumors of negotiations with Mukesh Ambani for Jio Financial Services to acquire Paytm wallet were denied.

Following these clarifications, Paytm shares saw a rebound, rising 7.19 percent to a high of Rs 438.35 on the Bombay Stock Exchange (BSE), marking an 18.81 percent increase from the day's low of Rs 395.50.

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