Discover the latest buzz surrounding Paytm’s partnership with Axis Bank and how it’s causing a frenzy in the stock market. Find out why investors are clamoring to get in on the action and what the Reserve Bank of India’s recent announcement means for Paytm’s future.
Paytm Shares Soar with Axis Bank
Monday, February 19, brought good news for Paytm as its shares surged by 5%, hitting the upper circuit for the second day in a row. The company, facing some tough times lately, found a ray of hope through its partnership with Axis Bank, especially for settling merchant payments.
In a strategic move, the fintech giant shifted its nodal account to Axis Bank, using an escrow account it opened with the bank. This decision shows the company’s efforts to stabilize its operations amidst the recent challenges it has been facing.
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Adding to the positive momentum, the Reserve Bank of India (RBI) provided clarity on the continuity of Paytm QR, Card machine, and Soundbox services beyond March 15 through a set of Frequently Asked Questions (FAQs).
Market Response and Analyst Views
When the markets opened, the One97 Communications stock quickly reached its upper price band of 5% at ₹358.55 on the Bombay Stock Exchange (BSE). Despite ongoing concerns, Bernstein, a brokerage firm, remained optimistic, recommending an outperform rating on the stock with a target price of ₹550. On the other hand, Citi maintained a sell call on the stock but acknowledged the positive impact of new partnerships, hinting at more bank collaborations in the future. However as reported earlier Jefferies stopped its coverage of One97 Communications, the parent company of PPBL amid regulatory woes.
Bernstein noted that the recent regulatory actions by the RBI primarily targeted PPBL, indicating that other essential functions of the company remain unaffected. In response, the fintech company clarified in a filing with the BSE that the partnership with Axis aimed to replace the nodal account previously used with PPBL. It’s interesting to note that Paytm Payment Services, a wholly-owned subsidiary, has been leveraging Bank services since its inception.
RBI’s Directives and Extension for PPBL
PPBL received an extension on various directives from the RBI, affecting customer transactions. Post-March 15, 2024, customers won’t be able to deposit funds or top-up their accounts, prepaid instruments, wallets, FASTags, or National Common Mobility Cards (NCMC). However, exceptions include interest, cashbacks, sweep-ins from partner banks, or refunds, which may be credited at any time. Customers, though, will retain the freedom to withdraw or utilize their balances without restrictions, as previously communicated.
Following March 15, PPBL will cease all banking services, except for withdrawals and balance utilization. Prohibited services include fund transfers (including AEPS, IMPS, and UPI), the Bharat Bill Payment Operating Unit (BBPOU), and the Unified Payments Interface (UPI) facility.
Bhaarat Bulletin’s Shikha Rai, Bimal Dev, and BSE/NSE have contributed to the above report
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