India’s largest digital payment company Paytm is in early talks to pick up substantial stake in the private bank major Yes Bank. If sources are to be believed then this stake sale is being initiated on the behalf of Yes Bank’s ex CEO Rana Kapoor, who along with his family owns 9.64 percent stake in the bank.
Kapoor is looking to fetch Rs 2,000 crore through this stake sale, sources privy to the matter said.
Even if the talks fructifies it might be little tricky for the deal to get regulatory approval from RBI, since Paytm’ parent company – one97 communication – already operates a payment bank, sources added. But if the deal does go through then it will mark an abrupt end to one of India’s most talked about banker and what otherwise would have been a potential rise of the successful entrepreneur in India’s banking sector.
Kapoor’s fortunes have been on a nosedive ever since he lost the bitter court battle to co-promoter Madhu Kapur. He was eventually shown the exit door by the RBI, which cited corporate misgovernance as the reason for his ouster.
Separately, Yes Bank is not enjoying the best of times either. Like all the major banks, even its balance sheet has been adversely impacted by rising NPA’s. As a result, the global rating agency Moody recently downgraded the bank’s long term foreign-currency issuer rating from Ba1 to BA3.
The bad press generated due to the fallout of fiasco surrounding Kapoor’s exit also added to the bank’s credibility woes.
Alibaba and SoftBank backed Paytm, meanwhile, is also witnessing lot of stress on its balance sheet. The Gurgaon based company’s losses ballooned by whooping 165% during the last financial year. The company’s consolidated loss currently stands at Rs 4217 crore. The payment giant is evidently facing the all heat due to competition emanating from the likes of Google Pay and Phonepe.
