In the wake of the recent regulatory crackdown on Paytm Payments Bank by the Reserve Bank of India (RBI), Yes Bank has expressed its openness to taking over the payment bank’s merchant accounts. The move comes as a potential lifeline for Paytm, grappling with regulatory actions that led to a halt in its business operations.
According to a report by Moneycontrol, Yes Bank MD and CEO Prashant Kumar highlighted the significant opportunity presented by acquiring Paytm Payments Bank’s merchants. However, he emphasized that any potential acquisition would be contingent upon Yes Bank completing Know Your Customer (KYC) verification and due diligence processes.
Prashant Kumar stated, “Regulator is very clear, we cannot shift risk from one entity to another.” He emphasized the importance of resolving and addressing any identified risks in compliance or other areas within Paytm and Paytm Payments Bank (PPBL) rather than transferring them to acquiring entities.
It’s noteworthy that the RBI, in its recent FAQs, outlined that Paytm QR codes, soundboxes, and card machines would continue to operate beyond the March 15 deadline only if merchants migrate to other banks.
Market experts have raised concerns about Paytm losing its merchant base in the aftermath of the regulatory actions. Paytm Payments Bank has been actively working with several banks, including a possible partnership with Yes Bank, Axis Bank, HDFC Bank, and State Bank of India (SBI) to ensure seamless transactions through the unified payments interface (UPI).
In response to the crisis, Paytm Payments Bank’s decision to shift its nodal account to Axis Bank provided some relief to Paytm’s share price, which had witnessed a decline.
Analysts at UBS anticipate Paytm to retain a substantial portion of its customer and merchant base post certain approvals from the NPCI. However, a 15-20% churn in merchants, customers, and devices is expected in Q4 FY24 compared to Q3 levels, along with a significant QoQ decline in loan origination.
While some brokerages express concerns about Paytm’s near-term financial impact, others believe the long-term user/merchant base damage would be limited.
Yes Bank, following the Paytm Payments Bank fiasco, has tightened its compliance and due-diligence checks for fintech partnerships. Prashant Kumar highlighted the importance of verifying KYC and due diligence for customers brought in by fintech partners.
In the stock market, Paytm has witnessed a rollercoaster ride, with a crash following RBI’s actions and a subsequent partial recovery. However, it currently trades 46.6% lower on the BSE from its price of INR 406.15 on January 31, the day RBI announced its restrictions.
