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Business News/ Markets / Stock Markets/  Paytm share price hits 5% upper circuit after a nod by NPCI for third party application provider licence
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Paytm share price hits 5% upper circuit after a nod by NPCI for third party application provider licence

Paytm Share price today: Paytm share price gained 5% as it received the much awaited approval to participate in UPI as a Third-Party Application Provider (TPAP)

Paytm share price today: Paytm share price gained 5% as it got much awaited approval to participate in UPI as a Third-Party Application Provider (TPAP) (REUTERS)Premium
Paytm share price today: Paytm share price gained 5% as it got much awaited approval to participate in UPI as a Third-Party Application Provider (TPAP) (REUTERS)

Paytm Share price today:  Paytm (One 97 Communications )  share price hit 5% upper circuit as the it got much awaited approval to participate in UPI as a Third-Party Application Provider (TPAP).  The same will be  under multi-bank model

Paytm getting approval from National Payments Corporation of India (NPCI) to operate as a Third-Party App Provider (TPAP) comes as a big relief for the company. The move while is positive nevertheless is also on expected lines said analysts. Paytm will be partnering with four banks namely Axis Bank, HDFC Bank, State Bank Of India Ltd and Yes Bank for its UPI business. While the four banks will act as the payment Service providers, merchant acquiring bank for existing or new UPI merchants will be Yes Bank.

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Analysts as Jefferies India Pvt Ltd said that the development removes the last remaining regulatory challenge for ensuring a smooth transition of customers and merchants.

The share price of Paytm has seen a steep fall of more than 50% post Reserve Bank of India's regulatory action. Significant restriction had been placed by RBI on One 97 Communications' partner entity, Paytm Payments Bank Limited (PPBL).  Following these restriction after March 15, 2024, Paytm Payments Bank was no longer liable to accept new deposits into its users' wallets and accounts.  However on February' 23, 2024, the RBI had advised NPCI to review One97 Communication Ltd's application to become a Third-Party Application Provider (TPAP) for UPI channel in order to ensure that the Paytm app continues to operate using UPI in accordance with regulations.

While the move will make it possible for Paytm to function similarly to its competitors, analysts say that the attention of investors may move away from the from regulatory obstacles to operational performance.

However analysts at Jefferies India said  that they will be await clarity on user/merchant retention and path to normalization for lending business.

Also Read- Why is Yes Bank share price skyrocketing for last two days — explained

“Paytm's focus will now move to ensuring customer/merchant retention, and we believe it will dip into its ~Rs8500 Crore cash reserves for spends on retaining users", said analysts at Jefferies.

Further depending on user/merchant retention and in the absence of an incremental governmental crackdown there could be a number of possible outcomes for the firm.

Analysts at Jefferies said that the path to normalization for the lending business (which has been partly suspended) will provide clarity on revenue/Ebitda trajectory. They see both positive and negative risks arising from user/merchant retention, revenue traction and cost-controls.  Analysts also remain watchful for clarity on attrition numbers and the path to normalization for lending business.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions

 

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ABOUT THE AUTHOR
Ujjval Jauhari
Ujjval Jauhari is a deputy editor at Mint, with over a decade of experience in newspapers and digital news platforms. He is skilled in storytelling, reporting, analysing and writing about stocks, investment ideas, markets, corporates and more. He is based in New Delhi.
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Published: 15 Mar 2024, 09:24 AM IST
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