Reliance Industries spinoff Jio Financial Services on Monday evening dismissed “speculative” media reports that it was not in talks with Paytm to buy its wallet business, as the Noida-headquartered firm scrambled to fend off the fire from the central bank's clampdown last week.
Paytm and Jio Financial Services have been engaged for months for a deal, The Hindu Business Line reported over the weekend, intensifying after the Indian central bank widened its crackdown on Paytm's payments bank, the transaction processing unit for financial services giant Paytm. Shares of Jio Financial Services rose more than 15% on local exchanges on Monday on the speculative reports. Paytm's market cap, on the other hand, has fallen by more than 40% in the last three working days.
The RBI has banned Paytm Payments Bank from offering several banking services, including accepting fresh deposits and credit transactions on its services. Paytm, the parent company of the ubiquitous mobile payments app of the same name, has said it will end business with its subsidiary and seek partnerships with other banks for the continuation of several core businesses.
TechCrunch first reported last week that the Reserve Bank of India was considering imposing additional penalties on Paytm and possibly revoking its bank license. Paytm Payments Bank, a subsidiary of Paytm, has 330 million Paytm wallet customers. In early 2018, when Paytm received a payments bank license — which allows the holder to offer a savings account to customers up to $2,400 — it had to surrender its PPI license, a necessary permit to operate a wallet business.
Reliance last year listed its little-known non-bank financial subsidiary Jio Financial Services. Jio Financial Services owns about 6% of Reliance and is expanding its lending and insurance businesses.