Paytm hits 5% upper circuit: Know the factors triggering the bounce back
Upstox
2 min read • Updated: February 19, 2024, 11:02 AM
Summary
Paytm shares have witnessed high volatility in recent weeks. The stock is down nearly 55% since 31 January after RBI restricted the company’s subsidiary Paytm Payments Bank to stop its operations on 29 February. However, last Friday, the central bank provided relief to the company by extending its deadline for Paytm Payments Bank to 15 March.
Paytm shares are locked in 5% upper circuit today with day high of ₹358.3 per share. But why? Here are the key triggers that are driving gains in Paytm shares:
RBI extends the deadline to 15 March
The Reserve Bank of India (RBI) has extended deadline for the restrictions on Paytm Payments Bank’s services to 15 March 2024, keeping larger public interest in mind. The earlier deadline was 29 February. Experts believe the RBI extension is a reprieve for the company, which ensures continuity of business and gives Paytm some time to become compliant with central bank rules and regulations.
Paytm partners with Axis Bank for business continuity
Another positive trigger for the stock is the partnership with Axis Bank. The fintech company said it has partnered with Axis Bank to settle merchant payments and transactions. The company has shifted its nodal account to Axis Bank through an escrow account that it has opened with it. Further, the company said that the Paytm QR, soundbox and card machines will continue to work beyond 15 March. Merchants who accept digital payments through Paytm can continue doing so, with Axis Bank as the nodal bank.
RBI releases FAQs clearing the confusion for Paytm customers
Besides the temporary extension, RBI released a list of frequently asked questions (FAQ) by answering 30 questions pertaining to services of Paytm Payments Bank and Paytm’s overall services after 15 March 2024. The press release answers all major questions on all services that will be affected, including, Paytm Payments Bank, Paytm wallet, FASTag, National Common Mobility Card, merchants system, Bharat Bill Payment System, and money transfer through UPI/IMPS.
Read more: RBI releases FAQs for Paytm Payments Bank customers
Conclusion
Despite today's rise, experts believe a bounce back in the Paytm stock could be short-lived as long-term concerns are still intact. Investors need to study the impact on its earnings after RBI's actions. Further, Paytm’s existing customer base as well as acquisition of new customers are likely to get impacted after the central bank's restrictions.