Paytm can create lucrative business models using consumer data, according to the CIO of Alchemy Capital

Paytm can create lucrative business models using consumer data, according to the CIO of Alchemy Capital

Veda said that, in spite of its sizable clientele, its payments banking division is uneasy because of legal concerns, which worries investors.

Hiren Ved, chief investment officer at Alchemy Capital, claims that Paytm, the parent firm of the banking section, can create a successful business model using its user data. Paytm has been urged by the authorities to cease taking deposits as of March.

Ved informed Moneycontrol that One97 Communications, the firm that distributes financial services and handles mobile payments and controls the Paytm brand, has 40 million active users. With their data, the company may provide modest and working capital loans to retailers.

On January 31, the Reserve Bank of India slapped sanctions on Paytm Payments Bank Ltd (PPBL), a subsidiary of One97, citing the need for supervisory action because of "persistent non-compliance and ongoing material supervisory concerns at the bank." The RBI withheld specifics of the issues.

According to One97, the RBI's guidelines on PPBL have no impact on its marketing or financial services operations. Its financial services, which are independent of PPBL and should not be impacted, include loan distribution, insurance distribution, and equity broking.

Ved claims that RBI had intended for PPBL to function independently of the service provider, but this was not the case. Even with the large client base, he said, investors do not want uncertainty brought on by regulatory difficulties.

On February 7, One97 Communications' shares surged 10% to Rs 496.75 on the BSE after the imposition of limitations by the RBI on the fintech company's payments bank operations, which had seen a nearly 50% decline.

tactical purchaser

According to Ved, Paytm's popularity increased as users and retailers began using its app for online payments after its demonetization in November 2016. According to Ved, Paytm took over as the accepted payment method following this.

Ved remarked of the Unified Payments Interface, "While everyone in the private sector thought there were no money in UPI, Paytm gained an enormous share of the market in UPI."

According to Ved, Paytm is special as it offers a platform for both consumers and companies and allows for service cross-selling.

According to Ved, Paytm has established a very valuable company that is headed toward profitability. Ved was unsure of how long it would take for the firm to make up the money it had lost, despite the fact that it had assessed the effect of the central bank's limitations.

According to Paytm, the regulatory actions are predicted to negatively affect its yearly operating earnings by a maximum of Rs 300–500 crore.

According to Ved, there can be bidders with strategic intent for Paytm's payment operations.

"I'm not sure whether Vijay Shekhar Sharma would be open to selling Paytm Payments Bank. Buyers could exist. We must first ascertain the current founders' willingness to sell their interest, however. We also need to confirm if the purchase and merger have the approval of the regulator, he said.

With the exception of interest, cashback, and refunds in any customer accounts, prepaid devices, wallets, Fastag, and NCMC cards, the central bank ordered Paytm Payments Bank to cease taking deposit or credit transactions or top-ups on or after February 29. Additionally, it mandated that all pipeline transactions and nodal accounts be settled by March 15 by the payments bank.