Reliance Industries spin-off Jio Financial Services announced on Monday night that it is not in talks with Paytm to buy its wallet business, as the Noida-based company scrambles to put out fires caused by the central bank's tightening last week. “Speculative” media reports were dismissed.
The Hindu Business Line reported over the weekend that Paytm and Jio Financial Services have been negotiating an agreement for months, but India's central bank has announced that Paytm's Payment Services, the transaction processing arm of financial services giant Paytm, has been in talks for months. The situation escalated as they expanded their crackdown on banks. Shares of Jio Financial Services soared more than 15% on local exchanges on Monday following speculative reports. Meanwhile, Paytm's market capitalization has declined by more than 40% in the past three business days.
On Tuesday, Paytm and Paytm Payments Bank also clarified that they have no involvement with Jio Financial Services and that reports suggesting otherwise are “factually incorrect”. Paytm shares rose 5.5% following the news on Tuesday morning.
The RBI has prohibited Paytm Payments Bank from offering a number of banking services across its services, including accepting new deposits and credit transactions. Paytm, the parent company of the ubiquitous mobile payments app of the same name, has announced that it will end transactions with its affiliates and explore partnerships with other banks to continue many of its core businesses.
TechCrunch first reported last week that the Reserve Bank of India is considering imposing additional penalties on Paytm and could revoke its banking license. Paytm Payments Bank, an affiliate company of Paytm, houses Paytm's 330 million wallet customers. In early 2018, when Paytm acquired the Payments Bank license (which allows owners to offer savings accounts of up to $2,400 to customers), it was required to surrender its PPI license, a permission required to operate a wallet business. was there.
Last year, Reliance took its little-known non-bank financial subsidiary Jio Financial Services public. Jio Financial Services owns around 6% stake in Reliance and is increasingly expanding its lending and insurance businesses.
Story updated with Paytm's comment Tuesday.