Mutual Funds Increase Stake in Paytm Despite Crisis, RBI Scrutiny Looms

In a notable turn of events, the mutual funds industry has shown increased confidence in crisis-ridden Paytm, with shares rising in January despite looming scrutiny from the Reserve Bank of India (RBI).

According to data compiled by PRIME Database, mutual funds held Rs 3,384.08 crore worth of Paytm shares by the end of January, marking a significant increase from December’s Rs 2,003.03 crore. This surge reflects a 7% share of Paytm’s market capitalization.

Institutional investors notably purchased Rs 936 crore worth of Paytm shares in January, boosting their holding value by Rs 1,381.06 crore during the same period.

Analysis by Fisdom Research revealed a substantial 41% increase in the mutual fund industry’s stake in Paytm from December 2023 to January 2024.

Among the top holders of Paytm shares as of January 2024 were Nippon India Mutual Fund, Mirae Mutual Fund, and Motilal Oswal Mutual Fund. Nippon India Mutual Fund increased its exposure by 42.45 shares, while Mirae Mutual Fund and Motilal Oswal Mutual Fund also raised their stakes significantly.

However, not all mutual funds remained bullish on Paytm. HSBC AMC exited completely from the stock in January, while Quant Mutual Fund reduced its exposure by 72.4%, and Aditya Birla Sunlife MF decreased it by 10%.

Despite the increased confidence from mutual funds, Paytm faces mounting regulatory pressure. The RBI recently extended the deadline for halting transactions for Paytm Payments Bank until March 15, adding to the challenges for the fintech giant, which had initially been asked to cease operations by February 29.