Payments bank licence cancellation won’t impact Paytm’s business: Bernstein

The Reserve Bank of India's (RBI’s) recent regulatory action on Paytm Payments Bank (PPBL) is unlikely to affect its associate entity Paytm's numbers, says an April 24 report by Bernstein.

The report has set a target price of Rs 1,500 for Paytm stock, which was trading at Rs 1,104, down 2% on the NSE at the end of trading today.

On April 24, the central bank cancelled PPBL’s operating licence more than two years after first imposing restrictions on its business over rule violations, including lapses in customer due diligence.


While industry circles had anticipated this, what surprised many was the language used by the regulator, which said the Paytm management’s character was prejudicial to the interest of depositors, and one of the reasons for the cancellation of its licence.

Bernstein also said that the wording of the regulator’s letter was “concerning,” even though Paytm no longer has a role in the management or board of PPBL despite holding 49% of the entity. It called the move a negative development for the Noida-headquartered firm.

The regulator also said that the bank would not be able to serve any social purpose and the management was running it in a manner detrimental to the interest of its depositors.

Interestingly, the report pointed out that with the banking licence cancelled, Paytm might focus on getting back its mobile wallet licence and applying to the RBI for a non-banking finance company licence.

RBI’s final regulatory action comes two years after barring PPBL from offering any basic banking services. In March 2022, the bank was stopped from adding new customers and from February 2024 all basic banking activities were halted.

On April 24, the central bank said that the bank had enough liquidity to be able to pay back all the money to its depositors on winding up the bank.