Shares of NSE: PAYTM fall by over 45% in just 1 week after RBI barred Paytm Payments Bank from onboarding new customers. Paytm Payments Bank is a digital banking service offered by PAYTM.
RBI ordered the company to stop opening new accounts after they found a number pf concerns regarding KYC norms, their links to China and Non-adherence to directions given by RBI during past inspections.
PAYTM got listed on NSE & BSE on 18th November , 2021 at a discounted price of ₹1950. Since then shares of PAYTM has seen continuos downfall and the stock has fallen by almost 79%
Surprisingly, there are some companies which can actually benefit form this restriction of RBI on PAYTM. We will discuss that further in this post.
About NSE: PAYTM
Paytm (One 97 Communications) is a leading digital payments and financial services company in India founded in 2010 by Vijay Shekhar Sharma. Headquartered in Noida, Paytm started as a website and mobile app for mobile & DTH recharges.
In India, ‘Paytm karo’ a popular campaing ran by the brand became so popular that it became synonymous with transferring money online.
Paytm has expanded to offer a range of digital payment options including Paytm Wallet, UPI, debit cards, net banking and more. It claims to have over 300 million registered users.
The company ventured into payment banking services in 2017 through its entity Paytm Payments Bank. It has also moved beyond just digital payments into financial services, commerce, gaming and more.
Before understanding which stocks will benefit let us understand, why some other banks can benefit from this fall of Paytm.
How other companies can benefit from BAN on Paytm?
Paytm’s payment services are tied to its own Paytm Payments Bank right now. But the RBI has banned Paytm from using its payments bank. So Paytm has to shift its payment services to other banks quickly.
There are two main payment services Paytm has to move – UPI payments and merchant payments.
For UPI payments, money is transferred from your bank to a middle account called a ‘Nodal account’ and then to the shopkeeper’s bank.
Right now Paytm’s nodal accounts are with its payments bank. Without its bank, Paytm has to find new banks for managing these middle accounts.
Paytm’s 37 million shopkeepers receive their payments in their Paytm Payments Bank accounts currently. Now their accounts have to shift to other banks. Now, other bank with which Paytm decides to partner can benefit from this ban.
This is a big task for Paytm. They handled 2.8 billion UPI payments just in December 2022! They have to finish shifting banks before February 28 when the RBI ban starts. Usually shifting banks takes 2-3 months.
Which Banks can benefit from the Paytm’s restriction from RBI?
In order to handle NSE: Paytm’s 2.8 billion active UPI transactions, only few Banks like YES Bank and ICICI Bank have the necessary infrastructure to manage such a large number of transactions.
Paytm have the customers, and these banks have the required backend services. If the FinTech giant decided to partner with any of these bank, the respective bank may benefit greatly from this partnership.
Even competitors of Paytm like Google Pay and Phonepe will benefit as people have now started to empty their Paytm accounts. Also the company has faced such allegations from RBI multiple times, which makes it difficult for people to trust One 97 communications with their money.
Important supports for NSE: Paytm
These are some support levels for Paytm, however it is adviced not to buy near supports in a freely falling stock.
| Support | Level (₹) |
|---|---|
| 1 | ₹413 |
| 2 | ₹392 |
| 3 | ₹282 |
| 4 | ₹224 |
| 5 | ₹141 |
Conclusion
NSE: Paytm got badly affected after RBI’s imposed a ban on its Payment Bank, however it will be intresting to see how the managment bounces back from this rock bottom situation.
Companies like YES Bank and ICICI will surely benefit if Paytm decides to partner with any of these banks. Intrestingly, today, on Feburary 6, Shares of YES Bank jumped by 10%. So is it a coincidence? that time will let us know.
The payment giant if bounces back well, we are sure to reach the forecasted long term targets of Paytm.
