With the market rife with reports that regulatory trouble may force India’s fintech poster boy Vijay Shekhar Sharma to sell Paytm wallet business and RBI may cancel the licence of Paytm Payments Bank, stock investors have begun to look for the next hero. While Paytm shares fell another 10% on Monday to record a Rs 20,000-crore loss in 3 days, rivals Jio Financial and Fino Payments Bank rallied up to 20%.

Shares of fintech company Fino Payments Bank, which competes with Paytm, hit the 20% upper circuit limit at Rs 372.30. Jio Financial or JFSL shares rallied 16% to hit a fresh high of Rs 295 after a newspaper reported that One 97 Communications is in talks with Jio to sell the Paytm wallet business.

Also read | Ambanis eyeing Paytm wallet? Jio Financial shares jump 13% on report saying so

Fino Payments Bank had few backers since it got listed at a discount to its issue price of Rs 577 in November 2021. Now the regulatory action against competitors has brought the spotlight back on the smallcap stock whose market capitalisation is just about Rs 3,000 crore.

The Mumbai‐based bank is a subsidiary of Fino Paytech, which is backed by marquee investors like Bharat Petroleum, ICICI group, Blackstone, IFC, Intel, and LIC among others. It has also applied for a Small Finance Bank license.

In the December quarter, the payments bank reported an 18% YoY increase in revenue to Rs 370.2 crore while its PAT expanded 19% YoY to Rs 22.8 crore.RBI has asked Paytm Payments Bank to stop new credit and deposit operations, top-ups, fund transfers, and other such banking operations by 29 February 2024. Customers will only be allowed to withdraw their balances from their accounts or other prepaid instruments due to non-compliance. After a series of violations, Paytm may lose payments bank licence.Also read | Paytm shares crash over 42% in 3 days; investors lose Rs 20,500 crore

The RBI is also reported to have flagged concerns around possible money laundering and KYC violation cases to the Directorate of Enforcement (ED). Paytm has, however, denied being investigated by ED on money-laundering charges.

In the meantime, a newspaper today reported that HDFC Bank and Jio Financial are among the forerunners to acquire Paytm’s wallet business, which is housed under Paytm Payments Bank. The news sparked a rally in JFSL shares which got listed last year following a demerger with parent entity RIL.

If JFSL acquires Paytm’s wallet business or Paytm Payments Bank, then it would give Jio Payments Bank a big head start in the fintech business. It had recently re-platformed to launch digital savings accounts and bill payments with the ground network of 2,400 business correspondents. The company has also launched debit cards, an app for merchants as well as Jio voice box.

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