In the wake of the Reserve Bank of India’s (RBI) stringent ban on Paytm Payments Bank, Paytm is reportedly exploring the sale of its wallet business.

What Happened: Talks are underway with potential investors, with HDFC Bank and Jio Financial Services emerging as the front-runners for acquisition, the Hindu Businessline reported, citing sources.

The ban, imposed on January 31, has reportedly prompted Paytm to consider strategic alternatives, including discussions with interested parties to offload its wallet business.

Since November 2023, Paytm has engaged in talks with Jio Financial Services, but discussions may be delayed due to KYC-related challenges that have affected Paytm’s aggressive pursuit of its wallet business since 2022.

See Also: Paytm vs. Paytm Payments Bank: What’s The Difference And Which Will Be Affected By RBI Order?

Why It Matters: The urgency to sell the business now stems from the looming threat of a complete halt, and sources suggested to the business daily that this could be viewed as a distress sale to ensure continuity for existing Paytm wallet users.

Simultaneously, Paytm has reportedly reached out to HDFC Bank for a potential deal, leveraging HDFC Bank’s status as one of its crucial banking partners. A deal with HDFC Bank could fortify the bank’s proprietary wallet business, addressing the overlap between HDFC Bank customers and existing Paytm wallet users.

Jio Financial Services, looking to make inroads into the payments bank sector, sees the acquisition of Paytm’s wallet business as a strategic move. As part of a larger bailout plan, there are indications that Jio might extend an offer to acquire Paytm Payments Bank. This potential acquisition would align with Jio’s broader vision for the payments ecosystem.

Despite regulatory challenges, Paytm Wallet has performed strongly, with 330 million wallet accounts. CEO Vijay Shekar Sharma, holding over 51% stake in the payments bank, oversees Paytm’s strategic decisions, while One97 Communications owns the remainder.

Price Action: While Paytm hit the lower circuit for the third consecutive session following the ban, Jio Financial’s share price soared 6.5% to ₹270.25, though HDFC was trading in the red, down 0.21% at ₹1,443.05.

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