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New Delhi: Vijay Shekhar Sharma is one of the most recognizable faces in the Indian fintech industry, but one who has also attracted his fair share of controversy.
Sharma launched Paytm (abbreviation for “payment through mobile”) to provide mobile stored value services. He launched the wallet service in 2011, but his business got a huge boost with demonetization in 2016. He placed ads on the front pages of top newspapers with Prime Minister Narendra Modi’s photo, calling demonetization “the boldest decision in the financial history of independent India”.
Paytm’s business is booming as there are fewer banknotes in circulation.
Sharma made waves in 2018 when he secured a $300 million investment from Warren Buffett’s Berkshire Hathaway in Paytm.
dispute
Paytm has been embroiled in controversy over its links with China after receiving a huge investment from Alibaba Group. Before Paytm’s IPO, the Chinese online company held a 34.7% stake in the company, making it the company’s largest shareholder.
Also read: RBI crackdown on Paytm: How Paytm payments bank is on central bank’s radar
Alibaba Group Company Antfin sold about 5% of its shares, reducing its stake to less than 25% to comply with regulatory requirements for the IPO.
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In order to get rid of the image of a Chinese-owned entity, Paytm announced in August 2023 that founder and CEO Vijay Shekhar Sharma would acquire a 10.3% stake in Antfin through its overseas entity Resilient Asset Management BV, which will make him the company’s largest shareholder. Holding 19.42% stake.
In return, Resilient issued debt instruments (optional convertible bonds) to Antfin, thus safeguarding the economic interests of Alibaba Group companies.
With this transaction, Antfin’s direct stake in Paytm has been reduced to 13.5%. Antfin further sold a 3.6% stake in Paytm, bringing its stake down to less than 10%, and currently holds 9.89% stake in the fintech company.
The company’s market value has shrunk significantly since its listing.
The company’s IPO begins on November 8, 2021, with a price range of $2,080-2,150 per share. Paytm IPO makes history $The Rs 18,300-crore equity issue “makes it the largest public offering in Indian corporate history”.
But the company’s stock debuted on the market on Nov. 18 with a weak performance and fell about 20% during trading hours.finally closed on $1,560 shares, down approximately 27% from the issue price $2,150.
Since then, Paytm’s share price has been unable to break above half of its issue price.After the Reserve Bank of India took action on January 31, One97 Communications shares fell approximately 40% to close at $The BSE price on Friday was 487.05.
In November 2023, billionaire Warren Buffett’s Berkshire Hathaway sold its stake in Paytm at a loss of 31% per share.Berkshire Hathaway has invested approx. $1,279 yuan per share, but sold at 1,279 yuan $877.29 per capita.
Currently, SAIF III Mauritius Company Limited, registered in Cayman Island, is Paytm’s single largest direct shareholder, holding 10.83%, followed by Sharma’s Resilient Asset Management BV, holding 10.29%. SAIF Fund is led by Chinese entrepreneurs, with Yan Yantao serving as managing partner.
Paytm’s conflict with RBI
Due to regulatory considerations, the Reserve Bank of India banned Paytm Payments Bank from opening any new accounts and wallets on June 19, 2018, with effect from June 20, 2018. The RBI lifted the ban on December 27, 2018, Effective from December 31, 2018.
The Office of the Banking Ombudsman issued a show-cause notice on March 6, 2019, stating that Paytm Payments Bank failed to monitor an account held by it that showed a sudden increase in the speed of daily transactions involving immediate transfers to other banks. These actions were found to be in violation of RBI’s KYC regulations.
The Reserve Bank of India (RBI) on November 25, 2022, rejected the application of Paytm Payments Services Ltd (PPSL) to operate as a payments aggregator. The banking regulator asked the company to resubmit its application within 120 days of getting government approval for OCL’s investment in PPSL. Foreign Direct Investment Guide. Regulators asked PPSL to continue operating on the condition that no new merchants join.
After the 120 days were over, the RBI granted another extension to PPSL but did not lift the restriction on the entry of new merchants.
The Reserve Bank of India (RBI) issued a show-cause notice to PPBL on July 29, 2021, asking it to submit false information to the Reserve Bank of India (RBI) confirming that OCL had completed the transfer of Bharat Bill Payment on August 28, 2017 Operating Unit (“BBPOU”) was transferred to PPBL. The company’s BBPOU business to PPBL was completed as of March 31, 2021.
Reserve Bank of India imposes fine on October 1, 2021 $PPBL was fined Rs 1 crore for violating the Payments and Settlement Systems Act, 2007.
Reserve Bank of India (RBI) imposes fine $The company paid Rs 593 crore to PPBL on October 10, 2023, after it found multiple irregularities, including the bank’s failure to identify the beneficial owners of the entities it joined to provide payment services.
The RBI found that PPBL violated regulatory caps on end-of-day balances of certain customers’ prepaid accounts using payment services by failing to monitor payment transactions and conduct risk analysis of entities using payment services. The China Banking Regulatory Commission found that PPBL delayed reporting network security incidents and failed to implement “SMS delivery receipt inspection” related device binding control measures.
PPBL’s video-based customer identification process infrastructure failed to block connections from IP addresses outside India.
Here is a comprehensive 3-minute summary of everything Finance Minister Nirmala Sitharaman said in her budget speech: click to download!
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