Following reports in the media that the CEO of the troubled digital payments company had met with India’s finance minister and central bank to try to settle a regulatory crackdown on its payments bank operation, shares of Paytm, opens new tab, surged as much as 10% on Wednesday.
No New Deposits
The Reserve Bank of India (RBI) ordered Paytm Payments Bank to stop accepting new deposits in its accounts and its well-known digital wallets from March, citing supervisory concerns and non-compliance with rules. Although Paytm shares rose as high as 496.25 rupees, they stayed far below their level prior to January 31.
Following the release of reports on meetings with officials from the government and central bank on Tuesday, the share price increased further.
According to a person with direct knowledge of the discussions, “talks are on about addressing the regulatory concerns and compliance issues with both the RBI and the ministry,” Reuters was informed on Tuesday.
Extension By RBI
According to the source, the company has asked the RBI for an extension of the deadline of February 29 and clarification over the transfer of its license for the wallets business and the digital highway toll payment service Fastag.
The CEO’s meeting with regulators has given investors some comfort, according to WealthMills Securities equities strategist Kranthi Bathini.
“While the main issues of compliance still remain and it is not clear how the company will handle the operational crisis going ahead, the stock has corrected a lot and that may be creating some buying opportunity,” Bathini said.
LSEG data shows that the company’s shares are still trading roughly 24% below the 14 analysts’ median price objective of 650 rupees.