Shares of YES Bank Ltd and Paytm’s parent company, One 97 Communications Ltd, are poised for attention on Thursday morning following a notable development. Prashant Kumar, the Managing Director and CEO of YES Bank, announced that the bank is open to taking over the merchants acquired by Paytm Payments Bank Ltd (PPBL).
Previously, reports suggested that YES Bank was among four banks Paytm was considering for a potential partnership to enable UPI transactions.
On Wednesday, YES Bank shares observed a decline of 5.06%, settling at Rs 23.84, while Paytm shares saw a 4.99% dip, closing at Rs 406.20. The recent RBI FAQs provided clarity that non-PPBL linked merchants, constituting 85% of Paytm’s total merchants, can continue operations normally. Additionally, the RBI granted a 15-day extension until March 15 for most PPBL-linked activities.
The subsequent RBI update outlined that customers using @paytm UPI handles could be migrated to other banks post NPCI approval. This implies that the significant linkages between Paytm and PPBL might be transferred to other banks through Paytm.
Prashant Kumar reportedly sees the acquisition of Paytm Payments Bank’s merchants as a promising opportunity. However, he emphasized the need for compliance and due diligence on KYC (Know Your Customer) verification.
According to Moneycontrol, Kumar expressed that Paytm has a substantial customer base among merchants, and YES Bank is open to acquiring these merchant accounts. He highlighted the potential, stating, “On average, even if these merchants transact for nearly Rs 25,000 a day, it is a big opportunity.”
Kumar stressed the importance of a proper KYC compliance process if YES Bank succeeds in acquiring the merchants. He also noted the regulatory perspective, stating, “Regulator is very clear, we cannot shift risk from one entity to another.”
Analysts at UBS believe that Paytm can retain a significant portion of its customer and merchant base post certain approvals from the National Payments Corporation of India (NPCI). However, they anticipate a 15-20% churn in merchants, customers, and devices in Q4 compared to Q3 levels, along with a 60% sequential decline in loan origination.
