Renowned investor Samir Arora of Helios Capital has weighed in on the recent challenges faced by Paytm, indicating that the issues may not necessarily be related to corporate governance but rather a regulatory distinction between the bank and non-regulated fintech entities (moneycontrol reported).
Paytm has been under the spotlight since the Reserve Bank of India (RBI) imposed restrictions on its lending business, prohibiting new deposits and credit transactions after February 29.
Arora clarified that while Paytm may indeed face issues, categorizing them as corporate governance problems might be an overstatement. He emphasized the separation between Paytm Bank, which is a regulated entity, and other non-regulated fintech arms within the Paytm ecosystem.
In corporate governance issues, Arora explained that concerns typically revolve around the management taking advantage of minority shareholders or engaging in fraudulent activities that harm investors. However, he suggested that Paytm’s situation is distinct, focusing more on the challenges posed by regulatory constraints and the clear divide between the bank and non-banking entities.
He highlighted that Paytm Bank is intended to function as an independent entity with its own management and control mechanisms. Still, the apparent common top management and policies across the broader Paytm ecosystem may be contributing to the challenges faced by the company.
Arora’s insights offer a nuanced perspective on Paytm’s recent developments, emphasizing the need to consider the regulatory landscape and operational structures when evaluating the nature of challenges faced by the fintech giant.