February 7, BENGALURU (Reuters) - After news broke on Wednesday that the CEO of the troubled digital payments company had met with the central bank and finance minister of India to try to address a regulatory crackdown on its payments bank operation, Paytm's shares surged as much as 10%.

The Reserve Bank of India (RBI) ordered Paytm Payments Bank to stop accepting new deposits in its accounts and its well-known digital wallets from March, citing supervisory concerns and non-compliance with rules. Although Paytm shares rose as high as 496.25 rupees, they stayed far below their level prior to January 31.

Following the release of reports on meetings with officials from the government and central bank on Tuesday, the share price increased further.
According to a person with direct knowledge of the discussions, "talks are on about addressing the regulatory concerns and compliance issues with both the RBI and the ministry," Reuters was informed on Tuesday.

According to the source, the company has asked the RBI for an extension of the deadline of February 29 and clarification over the transfer of its license for the wallets business and the digital highway toll payment service Fastag.

The CEO's meeting with regulators has given investors some comfort, according to WealthMills Securities equities strategist Kranthi Bathini.

"While the main issues of compliance still remain and it is not clear how the company will handle the operational crisis going ahead, the stock has corrected a lot and that may be creating some buying opportunity," Bathini stated.

Based on LSEG data, the company's shares are still trading approximately 24% below the consensus price estimate of 650 rupees set by 14 analysts.

Pranav Gundlapalle, senior analyst at Bernstein, stated of Paytm Payments Bank Ltd., "There is a realisation that Paytm's payment operations are quite sizable and that customers and merchants could be inconvenienced by a sudden shutdown of payments bank operations." As a result, efforts would be made to ensure a smooth transition out of its dependency on PPBL.