Paytm shares rise 5% again today. What is driving the rally?

Paytm Payments Bank, the banking arm of Paytm, has been barred by RBI from adding new customers after February 29. The deadline was later extended to March 15.

Shares of One97 Communications Limited, which runs the Paytm brand, jumped 5% on Monday, climbing to ₹428.10 and ₹427.95 apiece on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) respectively.

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The rise came on the back of the Reserve Bank of India's (RBI) announcement on Friday that it has advised the National Payments Corporation of India (NPCI) to examine One97's request to operate as third-party application provider (TPAP) for continued UPI (Unified Payments Interface) operations of the Paytm app.

An RBI-backed initiative, NPCI operates retail payments and settlement systems in the country.

Additionally, the central bank has asked NPCI to examine the possibility of migrating Paytm Payments Bank customers using the UPI handle '@paytm' to 4-5 other banks.

On January 31, RBI announced a series of measures against Paytm Payments Bank Limited (PPBL), the fintech major's banking arm, over ‘persistent non-compliances.’ These included PPBL being barred from adding new customers after February 29, a deadline that now stands extended till March 15.

The RBI move made One97 Communications Limited look for partnerships with external lenders to ensure continuation of Paytm's UPI services. The Noida-based fintech major is in talks with multiple lenders in this regard.

(With PTI inputs)