One97 Communications, the parent of Paytm, is in the initial round of talks to acquire a stake in private sector bank Yes Bank. The structure of the deal is being decided. It’s not clear whether Paytm will execute the transaction solely or with a consortium.
If the deal goes through, it also requires a nod from apex banking body Reserve Bank of India (RBI) as Vijay Shekhar Sharma, Paytm Chief Executive Officer already owns Paytm Payments Bank.
According to buzz in media, Sharma will acquire Rana Kapoor and his daughters’ stake in a personal capacity. However, he may use One97 as well for this transaction.
Over the past two years, Yes Bank has been in bad shape with a rising number of Non-Performing Assets (NPAs). The banking firm is desperately looking for investors who can help it to transform.
Besides Paytm, PE firms including TPG, Advent and KKR are also in talks to invest in Yes Bank.
The deal would facilitate lending capabilities for Paytm. It can also use Yes Bank for payment deposits since Payment Banks are not allowed to take a deposit over Rs 1 lakh. So far, Paytm has no presence in lending, which is, according to experts, is the only way payment companies can make money.
Yes Bank had reported its first-ever loss of a whopping Rs 1,506 crore for the March quarter under new authority led by Ravneet Gill. Last month, it had raised Rs 1,930 crore through a qualified institutional placement (QIP).
In the situation when Yes Bank has slipped to 10th number from 7th in the top banking list, it would be interesting to see what this stake acquisition, if materialises, holds in for the Bank.
This development was first reported by TOI.