Jio Financial Services witnessed a significant surge of around 14% in its shares during Monday's trading session following reports that it is eyeing the acquisition of Paytm's wallet business. According to sources cited by the Hindu BusinessLine, HDFC Bank and Jio Financial Services are leading the race to acquire the wallet business of One 97 Communications Ltd, the parent company of Paytm.
In response to the news, JFS stocks skyrocketed by 15.31% to reach a new high of ₹292.60, while Paytm shares experienced a 10% decline, hitting the lower circuit limit and falling by 43% over the past three trading sessions. HDFC Bank shares remained relatively stable during the day.
Jio Financial Services, a holding company with subsidiaries like Jio Insurance Broking, Jio Payment Solutions, and Jio Finance, operates in the financial services sector. The company has a joint venture called Jio Payments Bank and has recently applied for regulatory approval to engage in mutual fund activities, planning to invest $150 million alongside BlackRock Financial Management in the joint venture.
The reports about Paytm exploring the sale of its wallet business have surfaced amidst regulatory challenges for the fintech giant. The Reserve Bank of India (RBI) imposed restrictions on Paytm's payment bank activities, and there are ongoing investigations by the Enforcement Directorate (ED) into alleged money laundering cases involving the company and its CEO.
Additionally, a Bloomberg report has hinted at the RBI considering the cancellation of Paytm Payments Bank's license as early as next month. These factors have contributed to the recent decline in Paytm shares, making the potential acquisition by Jio Financial Services and HDFC Bank a noteworthy development in the financial sector.
Also Watch: How will RBI's stringent curbs on Paytm impact your accounts? Here's what Paytm customers should know