Jio Financial denies rumors about considering acquiring the Paytm wallet

Mukesh Ambani’s Jio Financial Services (JFSL) clarified on Monday that it’s not discussing acquiring Paytm wallet with One 97 Communications.

 In a late-night regulatory filing, JFSL stated that the news is speculative and they haven’t engaged in any negotiations regarding this matter. The clarification came in response to reports suggesting that the NBFC is in talks with One 97 to acquire the wallet business, as requested by the stock exchange BSE.

After reports surfaced yesterday indicating that HDFC Bank and Jio Financial were leading contenders to purchase Paytm’s wallet business, the clarification was issued. Following the report, shares of Jio Financial Services Ltd saw a notable surge of over 15 percent yesterday.

Last week, the RBI issued a directive that limits Paytm from accepting new deposits or permitting credit transactions after February 29.

Improperly identified accounts on Paytm Payments Bank, numbering in the hundreds, were cited as a significant factor leading to the RBI’s imposition of strict limitations on the company, according to sources.

 Additionally, over 1,000 users were discovered to have linked the same Permanent Account Number (PAN) to their accounts.

Since last Thursday, Paytm’s shares halted trading three times due to substantial losses, dropping by 20% twice and 10% once on Monday. This led to a total decrease of 42% over the past three days. On Monday, the stock closed at ₹438, matching its lowest value recorded before in November 2022. This comes after a significant rebound from ₹438 to its recent peak of ₹998 in the last 52 weeks.

Both the RBI and auditors found inaccuracies in the compliance submitted by the payments bank during verification processes.

Sources indicate the RBI’s concern that some accounts might have been utilized for money laundering.

What’s the current situation with Paytm Payments Bank?

On January 31, the Reserve Bank of India placed severe restrictions on Paytm Payments Bank, preventing it from accepting new deposits and credit transactions starting from February 29 onwards.

The central bank stated that reports from both a thorough system audit and subsequent compliance validation by external auditors showed ongoing non-compliance issues.

After February 29, customers won’t be able to make additional deposits or credit transactions in any accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc., except for potential interest, cashback, or refunds, as stated by the RBI.

A year ago, the banking regulator had prohibited Paytm Payments Bank from enrolling new customers.

One97 Communications, Paytm’s parent company, which experienced a 43 percent drop in four days, was trading at Rs 448.5 on the National Stock Exchange, up 2.28 percent from the previous close.

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