Paytm jumps 5pc as digital payments app survives banking unit shutdown

Shares of India’s Paytm rose a stock exchange-allowed maximum of 5 percent on Friday, a day after it got a third-party application provider license that will allow it to offer digital payments after its banking unit ceases operations.

The license, granted by the country’s payments authority, came as Paytm Payments Bank will cease to operate on March 15, following regulatory action due to non-compliance with certain norms.

Paytm’s shares were up 5 percent at 370.70 rupees early in the session, set for its best day in two weeks, with its trading volume of over 4 million shares already making it the stock’s fourth busiest day this month.

Still, the stock has just over halved in value since late January when the Reserve Bank of India ordered Paytm Payments Bank to stop accepting fresh deposits in its accounts or popular wallets.

The third-party app provider license, brokerage UBS said in a note, means Paytm will operate like its competitors such as Google Pay and PhonePe, likely shifting investor focus to operational performance over regulatory headwinds.

However, Jefferies said that for Paytm to retain customers and merchants, it will have to dip into its cash reserves of 85 billion rupees ($1.02 b).

Earlier, Indian digital payments firm Paytm plans to cut close to 20 percent of staff at its banking unit amid uncertainty over the unit’s future due to a looming central bank deadline for it to halt most operations, two sources said.

Paytm Payments Bank has decided to lay-off staff in certain divisions, including operations, the sources with direct knowledge of the matter said.

Paytm, formally known as One 97 Communications, owns a 49 percent stake in the bank which was ordered by the Reserve Bank of India (RBI) at the end of January to stop accepting credit transactions or deposits across products such as savings accounts, prepaid cards and digital wallets by March 15, following persistent compliance breaches.