Jio Financial Services Ltd (JFS) experienced a significant surge in stock prices, climbing 8.53% during Monday’s trading session on BSE.
This uptick in market performance comes on the heels of a media revelation hinting at a possible acquisition of One 97 Communications Ltd’s (Paytm) wallet business by JFS and HDFC Bank.
The news propelled JFS shares to a new high of Rs 275.40, marking a notable milestone for the financial services entity spun off from Reliance Industries.
Paytm share nosedive
Conversely, Paytm’s shares faced a downturn, hitting a 10% lower circuit limit, and witnessing a 43% decline over three trading sessions. Meanwhile, HDFC Bank’s shares remained stable amidst these developments.
Jio Financial Services, a comprehensive holding company, boasts a diverse portfolio in the financial sector, including a partnership with Jio Payments Bank.
The conglomerate extends its services through several consumer-focused subsidiaries such as Jio Insurance Broking (JIBL), Jio Payment Solutions (JPSL), and Jio Finance (JFL), solidifying its presence in the financial services landscape.
Recent reports from the Hindu BusinessLine, citing well-informed sources, revealed that Paytm is actively engaged in preliminary discussions with potential buyers for its wallet business, with HDFC Bank and Jio Financial Services emerging as primary contenders.
Jio Financial Services strategic move
JFS has also ventured into the mutual funds arena, submitting an application alongside BlackRock Financial Management to initiate mutual fund activities.
This strategic move aims to secure an in-principle approval, with both entities planning to invest $150 million each into the venture, showcasing their commitment to expanding their financial services offering.
The backdrop of these developments is marked by Paytm’s recent challenges, including regulatory restrictions imposed by the RBI on its payment bank operations and ongoing investigations by the Enforcement Directorate (ED) into allegations of money laundering, which the fintech giant has refuted.
A Bloomberg report raised concerns about the potential revocation of Paytm Payments Bank’s license, further intensifying scrutiny over the company’s regulatory compliance and operational stability.
As the financial landscape continues to evolve, the potential acquisition of Paytm’s wallet business by leading financial institutions like Jio Financial Services and HDFC Bank signifies a pivotal moment in the industry, highlighting the dynamic interplay between traditional banking entities and fintech innovators in shaping the future of financial services in India.
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