India's Paytm Shares Up 5% as Regulator Allows New Digital Payment Users

Paytm's stock surged by 5% following the announcement from India's payments regulator that the fintech company is allowed to onboard new users for its main digital payments service, eliminating a major obstacle caused by a ban on its banking division mandated by the central bank.

The nation's financial regulator closed Paytm's banking division in January because of ongoing compliance problems, leading to a decrease in monthly transacting users (MTU) from 100 million in the previous quarter to 70 million in the September-quarter. Paytm announced on Tuesday that the National Payments Corporation of India (NPCI) had given approval in August, after the company made a request.

Rahul Jain, vice president of research at Dolat Capital, said that the approval of new client onboarding by NPCI has significantly cleared the way for the revival of MTU.

As of Tuesday's ending, Paytm's stock had dropped approximately 10 percent following the regulatory actions by the central bank on Jan. 31. This involved a decrease of 5 percent on Tuesday following Paytm's Q2 results revealing a minimal decrease in revenue and a shrinking user base for its digital payments service.

Paytm, headquartered in Noida, India, is a multinational fintech company that focuses on digital payments and financial services. Vijay Shekhar Sharma founded Paytm in 2010 as part of One97 Communications. The company provides mobile payment options for customers and allows merchants to accept payments using QR code payment, Soundbox, Android-based payment terminal, and online payment gateway. Paytm collaborates with banks to provide financial services like microcredit and buy now, pay later options to its customers and sellers.