A man exercises in a gym near a barcode for Paytm, an Indian cellphone-based digital payment platform, in New Delhi on November 18, 2021.
Sajjad Hussain | AFP | Getty Images
Financial technology firm Paytm has been in discussions with the upper echelons of the Indian government this week, as it tries to reverse a market rout that wiped some $2.5 billion off its value.
Paytm’s banking unit has been ordered by the Reserve Bank of India to stop accepting fresh deposits in its accounts or its digital wallet from March. It’s also reportedly being probed by the federal anti-fraud agency on possible violations of foreign exchange laws.
Two sources familiar with the matter, who preferred to remain anonymous as they were not permitted to speak publicly, confirmed to CNBC an earlier Reuters report that Paytm CEO Vijay Shekhar Sharma had met with Finance Minister Nirmala Sitharaman late Tuesday.
One of the sources added that Sharma was told to meet and sort out the issue with the RBI as it was essentially a regulatory matter.
The two sources were divided on the outcome of the meeting, with one calling it productive and possibly leading to something positive for Paytm over the longer term, while the other said it was unlikely to produce a favorable result.
The Reuters report on Wednesday suggested Paytm had sought an extension on the Feb. 29 deadline from the RBI to stop accepting fresh deposits.
The Indian Finance Ministry, the RBI and Paytm did not immediately respond to CNBC’s requests for comment. A Paytm spokesperson has denied any violation of foreign exchange laws, calling them “unfounded and factually incorrect,” according to Reuters.
Shares of the company, listed as One97 Communications on India’s National Stock Exchange, hit a record low earlier in the week. The shares saw a massive three-day sell-off following the RBI’s order last week which wiped out more than $2.5 billion in value, before a subsequent bounce.
Earlier in the week, Indian billionaire Mukesh Ambani’s Jio Financial Services denied media reports it was buying Paytm’s wallet business. Paytm also dismissed the reports as “speculative, baseless and factually incorrect.”