Shares of Paytm saw a 2% increase at the opening of the market on the National Stock Exchange (NSE) on April 18.

This positive movement in stock prices came shortly after One 97 Communications Limited, the parent company of Paytm, announced it had received regulatory approval to commence the migration of its customers to a new set of partner banks designated as Payment Service Providers (PSPs).

The PSP banks involved in this transition include major institutions such as Axis Bank, HDFC Bank, State Bank of India (SBI), and Yes Bank, which are set to replace Paytm Payments Bank Limited (PPBL) in this capacity.

At 9:20 AM, Paytm's stock was trading at Rs 399.10.

This strategic shift was detailed in a filing on the NSE by Paytm, indicating that the migration began following the National Payments Corporation of India's (NPCI) approval on March 14.

The transition to these prominent PSP banks marks a significant move for Paytm, aligning with broader compliance and operational enhancements.

Earlier regulatory challenges had impacted Paytm's operations significantly.

On January 31, 2024, the Reserve Bank of India (RBI) had imposed severe restrictions on Paytm Payments Bank, including prohibiting the acceptance of fresh deposits and execution of credit transactions starting from February 29.

This action was taken due to persistent non-compliance issues and ongoing supervisory concerns identified within the bank.

Further exacerbating the situation, on March 11, the RBI also prohibited Paytm Payments Bank from acquiring new customers.

These stringent regulatory measures had a pronounced effect on Paytm’s performance in the digital payments arena. Specifically, Paytm's market share in the Unified Payments Interface (UPI) transactions fell to nine percent in March, as reported by the National Payments Corporation of India (NPCI).

This represented the lowest market share for Paytm in the past four years, underscoring the challenges faced by the company amidst a tightening regulatory environment.

The recent approval for customer migration to PSP banks is viewed as a constructive step towards stabilizing Paytm's operations and restoring confidence among its user base and investors, reflected by the positive uptick in its stock prices following the announcement.