Here's what Macquarie makes of Paytm Payments Bank's board rejig

On January 31, the RBI imposed major business restrictions on PPBL, including a bar on accepting fresh deposits and doing credit transactions after February 29.

Shares of Paytm gained over 1 percent at open on the NSE on February 27. On February 26, Vijay Shekhar Sharma stepped down to help reconstitute the Board of Paytm Payments Bank Ltd (PPBL). At 9:30 am, the stock was trading at Rs 433.30.

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Brokerage firm Macquarie has given an ‘underperform’ call on the Paytm stock with a target price of Rs 275 per share. This implies 35 percent downside from the February 26 closing price of Rs 478. The Paytm stock has lost 44 percent since the Reserve Bank of India (RBI) imposed crippling restrictions on Paytm Payments Bank on January 31.

According to the brokerage, through this move to resign from the board, Sharma is sending a sign to the regulator that he is willing to give up control of the Paytm Payments Bank. At present, 51 percent of Paytm Payments Bank is owned by him.

“If Paytm Payments Bank Is allowed to carry out operations, it will provide additional profitability for Paytm,” the report added. The FY 2023 shows Rs 2.44 crore in profit. However, Macquarie analysts also said that they do not expect RBI to authorise any related-party transactions between Paytm and Paytm Payments Bank hereon.

Also read: Vijay Shekhar Sharma steps down from PPBL board, new chairman to be appointed soon

According to a release, former Central Bank of India chairman Srinivasan Sridhar, retired IAS officer Debendranath Sarangi, former Executive Director of Bank of Baroda Ashok Kumar Garg, and retired IAS Rajni Sekhri Sibal have joined the PPBL Board as independent directors.

On January 31, the RBI imposed major business restrictions on PPBL, including a bar on accepting fresh deposits and doing credit transactions after February 29. On February 16, it extended the deadline to March 15. The National Payments Corporation of India (NPCI) is currently examining requests by Paytm parent One97 Communication to become a Third-Party Application Provider (TPAP) for the UPI channel, for the continued operation of the Paytm UPI app, according to reports.

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