Paytm Payments Bank News: Clouds of crisis loom over Paytm; This brokerage firm takes strong step

Paytm Payments Bank News: Brokerage firm Jefferies Financial has suspended its coverage on Paytm operator One97 Communications Ltd.

The company said that it will not give it any kind of rating until the situation of the struggling Indian fintech improves.

With the move, Jefferies becomes the first major foreign brokerage to drop coverage on Paytm, moving the stock to “Not Rated” status.

The decision comes weeks after Jefferies downgraded Paytm to underperform last month following a Reserve Bank of India order directing Paytm Payments Bank to shut down its significant operations due to non-compliance.

Paytm Payments Bank News

Paytm Payments Bank News: Jefferies analysts Jayant Kharote and Prakhar Sharma emphasized the impact of Paytm losing its banking license, saying the business model will now resemble that of pure payment service providers.

He expects Paytm’s focus to shift towards customer retention and speculates that the company can use its substantial cash reserves of ₹85 billion (US$1 billion) to ensure user retention.

Paytm share price today on Feb 20

Paytm shares have seen a sharp decline since the unexpected regulatory intervention by the Reserve Bank of India, losing more than half of their value.

In an effort to save its merchant payment settlement operations, crisis-hit Paytm has partnered with Axis Bank to replace its affiliate, Paytm Payments Bank.

Paytm Payments Bank News: Despite the challenges, Paytm shares experienced a daily range gain of 5 per cent in Monday’s trade, indicating some positive market response to its efforts.

The Reserve Bank of India has given time till March 15 to Paytm Payments Bank to stop all transactions.

Initially directed to shut down operations on February 29, the extension allows no further deposits, credit transactions or top-ups into customer accounts after March 15, 2024.

RBI clarified that the exceptions include interest, cashback, sweep-in from participating banks.

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