Shares of One 97 Communications Ltd, the parent company of Paytm, surged on Wednesday. | Image:
Reuters
Shares of One 97 Communications Ltd, the parent company of Paytm, surged on Wednesday after the Reserve Bank of India (RBI) granted in-principle authorisation to its subsidiary, Paytm Payments Services Limited (PPSL), to operate as an online payment aggregator.
The stock jumped 4.11 per cent, trading at Rs 1,166 on the BSE, after hitting a 52-week high of Rs 1,186.50 earlier in the day.
What Did RBI Order Say?
The authorisation, granted under the Payment and Settlement Systems Act, 2007, enables PPSL to offer online payment aggregation services by the RBI’s Guidelines on Regulation of Payment Aggregators and Payment Gateways.
The central bank said, “hereby grants an ‘in-principle’ authorisation to Paytm Payments Services Limited (PPSL) to operate as an online Payment Aggregator subject to adherence to the PA-PG Guideline and the clarifications issued by RBI.”
The order clarifies that the approval only covers online payment aggregation operations as defined in the guidelines. It also advises the company to complete a mandatory system and cybersecurity audit.
According to the RBI’s directive, “The System Audit Report should be submitted to RBI within six months from the date of this letter, failing which the in-principle authorisation granted hereby shall lapse automatically and grant of final authorisation shall not be considered thereafter.”
RBI Withdraws Restriction On Paytm
In a significant relief for the company, the RBI also withdrew earlier merchant onboarding restrictions placed on PPSL in November 2022. The order stated, “Merchant onboarding restrictions stand withdrawn from the date of this letter,” enabling Paytm to resume adding new merchants to its platform.
The RBI has also asked PPSL to comply with additional norms in case of any change in ownership or shareholding, referring to its July 4, 2022, guidelines on prior approval for takeovers or transfers of payment system operators.
This regulatory nod is being viewed as a major boost for Paytm, which had faced operational constraints due to earlier curbs.
Ant Group Exit From Paytm
Earlier this month, billionaire Jack Ma’s Ant Financial exited the company by selling its entire 5.84 per cent stake for around Rs 3,803 crore. The shares were offloaded by Ant Group’s affiliate, Antfin (Netherlands) Holding BV. Ant Group, formerly known as Ant Financial, is an affiliate of the Chinese conglomerate Alibaba Group.
Paytm’s stock has seen significant gains. Over the past week, the share price has risen by 10.57 per cent. In the past month, it has climbed 22.58 per cent, and over the last year, the stock has delivered a remarkable 130.65 per cent return.
As of the latest data, the company’s full market capitalisation stands at Rs 74,434.17 crore. One 97 Communications is part of the BSE 500 index, which tracks the performance of 500 leading companies listed on the Bombay Stock Exchange.