In a strategic move that could reshape India’s financial technology landscape, Jio Financial Services, a subsidiary of Mukesh Ambani’s Reliance Industries, is reportedly in advanced talks to acquire Paytm’s wallet business. The development comes in the wake of the Reserve Bank of India’s (RBI) recent ban on Paytm Payments Bank from accepting deposits or credits, pushing Paytm to explore options to navigate its regulatory challenges.
Shares of Jio Financial witnessed a significant surge, jumping up to 14%, following reports that discussions are underway between One 97 Communications, the parent company of Paytm, and Jio Financial, as well as HDFC Bank, for a potential acquisition of Paytm’s wallet business.
The dialogue between Paytm and Jio Financial is said to have commenced in November, while discussions with HDFC Bank gained momentum just before the RBI imposed the ban on Paytm Payments Bank. The potential acquisition is being viewed as a crucial element of a broader bailout plan for Paytm, which has been grappling with an existential crisis due to regulatory restrictions.
Paytm, a leading player in India’s digital payments sector, has recently faced intensified scrutiny and controversy, with regulatory agencies investigating potential money laundering activities through its platform. Despite vehemently denying all allegations, Paytm’s shares took a hit, plummeting by 42% in just three days following the RBI directive.
Jio Financial’s existing ownership of Jio Payments Bank, with its re-platformed digital savings accounts, bill payment services, and an extensive network of 2,400 business correspondents, positions it as a strong contender for acquiring Paytm’s wallet business. This move aligns with Mukesh Ambani’s broader vision for Reliance Industries in the digital and financial domains.
In a virtual town hall with employees of Paytm Payments Bank Ltd (PPBL), Paytm CEO Vijay Shekhar Sharma sought to reassure the team, emphasizing that they are actively working to understand the situation and will engage with the RBI to seek resolution.
The potential acquisition by Jio Financial introduces an intriguing dynamic to the unfolding narrative in India’s fintech sector, signaling potential consolidation and strategic realignment amid evolving regulatory landscapes.
