Indian fintech upstart Paytm denies report of data leak to Chinese investors

March 14, 2022 0 Comments

Shares in One 97 Communications, the parent company of India’s most popular digital payments app Paytm, fell 13% on Monday to hit a record low of 672.00 rupees.

The plunge came as India’s central bank, the Reserve Bank of India (RBI) last week banned Paytm Payments Bank from accepting new customers and ordered a full audit of its IT systems, citing “material” supervisory concerns observed in the bank, without elaborating further.

Earlier on Monday, Bloomberg reported that RBI had found the company’s servers sharing information with China-based entities that indirectly own a stake in the Paytm Payments Bank.

Paytm has denied a news report from Bloomberg, saying that no investor had access to the company’s customer data, and the country’s central bank had raised no concerns related to data storage or access.

In a statement, the company said the payments bank is taking immediate steps regarding the RBI’s decision and is committed to working with the regulator to address its concerns.

Paytm Payments Bank gained central bank license to operate as a scheduled payments bank in December 2021, allowing it to extend its financial services activities. Paytm CEO and founder Vijay Shekhar Sharma controls 51% of Paytm Payments Bank, with the rest held by One97 Communications.

In 2015, Alibaba’s fintech subsidiary Ant Group acquired a 25% stake in One97 Communications as part of a strategic agreement. Before the Indian unicorn going public in November, Alibaba, along with Ant Group, hold almost 38% of Paytm’s parent firm, according to the Economic Times.

India, with a more than 1.3 billion population, was once one of the most sought-after investment destinations among Chinese internet giants. Chinese companies invested $3.9 billion in Indian start-ups in 2019, almost double the amount in 2018. However, Chinese capital has been accelerating its withdrawal from India after the geopolitical conflict between the two countries intensified since early 2020.

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