Reliance Industries spinoff Jio Financial Services said on Monday evening that it is not in talks with Paytm to acquire the wallet business, denying “speculative” media reports as the Noida-based company tries to put out the fire from central bank crackdown last week.
The Hindu Business Line reported over the weekend that Paytm and Jio Financial Services had been locked in a deal for months, which escalated after India’s central bank widened its crackdown on Paytm’s Payments Bank, the unit that processes transactions for the financial services giant Paytm. Shares of Jio Financial Services jumped more than 15% in local bourses on Monday, according to speculative reports. Paytm’s market cap, on the other hand, has shrunk by more than 40% in the last three business days.
The RBI has banned Paytm Payments Bank from offering many banking services, including accepting new deposits and credit transactions on its services. Paytm, the parent company of the ubiquitous mobile payments app of the same name, said it will end operations with its subsidiary and seek partnership with other banks to continue many of its core businesses.
TechCrunch first reported last week that the Reserve Bank of India is considering imposing additional penalties on Paytm and may revoke its banking license. Paytm Payments Bank, a subsidiary of Paytm, houses Paytm’s 330 million wallet customers. In early 2018, when Paytm received its Payments Bank license — which allows the holder to offer customers a savings account of up to $2,400 — it had to surrender its PPI license, the license required to run its wallet business.
Reliance introduced its little-known non-banking financial subsidiary Jio Financial Services last year. Jio Financial Services owns about 6% of Reliance and is increasingly expanding its lending and insurance businesses.
