Paytm : Vijay Shekhar Sharma, who was raised in poverty before becoming a millionaire, is a crisis management success tale.

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The RBI directive has raised concerns about the sustainability of PayTM, a digital money transfer service.Shares of One97 Communications, owned by Paytm, saw a decline following the Reserve Bank’s action. This is the tale of Vijay Shekhar Sharma, the youngest billionaire in the nation, who came from Aligarh, Uttar Pradesh, where he was hesitant to speak English, and went on to found Paytm.

Given that the corporation saw exceptional earnings as a result of the Prime Minister Narendra Modi government’s decision, what led to the current crisis?

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Birth, Education & Crisis

Prakash and Asha Sharma welcomed Vijay Shekhar into the world on June 7, 1978, in the Uttar Pradeshi district of Aligarh. He completed his elementary schooling in Harduvaganj. His dad was a hard-charging schoolteacher. He went to schools with mediocre infrastructure. A few pupils in the school lacked even sandals for their wear. However, Sharma was aware of the value of education. He was constantly studying.

His parents used the money they earned as teachers to raise their two boys and two daughters. It is mandatory to wear the school uniform even if there is a marriage within the family.

The family’s poor financial situation stems from a Rs 2 lakh loan that was taken out after the daughter’s marriage. To conserve money for food, Vijay Shekhar Sharma had to walk eight or ten kilometers each day.He passed the Higher Secondary Examination when he was just 14 years old. He was forced to wait a year to be admitted to college, though, because engineering institutes required applicants to be at least 15 years old. Following his unsuccessful attempts at a number of government universities, he began getting ready for the Joint Entrance Examination.

Vijay Shekhar came to understand the value of English for advanced study while conversing with officers and vice-chancellors of different universities. He would bring books in Hindi and English, having read none before, and coming from a small town with little money and few resources. His goal was to escape poverty for himself and his family.

In addition, Vineet Bansal Sharma wrote a book titled “Face of Indian Start Up Industry Vijay Shekhar Sharma” that concentrated on Paytm.

Beginning in college

Vijay Shekhar Sharma encountered issues outside of the classroom as well. His troubles have not abated, but have gotten worse in Delhi as well.

According to Bansal’s book: Vijay Shekhar received admission to Delhi College of Engineering in 1994 with the goal of majoring in electronics and communication engineering. He was not quite sixteen when he was accepted to Delhi University.It was Vijay Shekhar who got into college. However, he had two challenges. He is younger than the other pupils, to start. Another is that the majority of Delhi students speak English as their first language. However, Vijay Shekhar speaks Hindi with ease.

Due to his inability to interact socially with other students, he preferred to read and spend time with books. His academic career cost grew even more when he learnt to code and discovered that reasonably priced, well-written English books could be found at Daryaganj and Asif Ali Road in Delhi. He created a web program for a private airline’s Delhi-Mumbai timetable while he was still a student. He received money of Rs. 1,000 for this. Sharma then understood that he could succeed even in the absence of a formal school credential.

At the time, Sabir Bhatia was a Stanford University student who sold Microsoft his email startup, Hotmail, for $400 million. A standout among the younger technologists in India is Sabir Bhatia. Vijay Shekhar was aware that his financial circumstances prevented him from enrolling in an American university.

Still, he saw the value of startups and the Internet. He and his friend launched an internet-based start-up during their time in college. The visiting card included the hostel room number on it.When there was just a pager, he made friends with a merchant. In exchange for some cash, the store owner let Vijay Sharma write his phone number on the visiting card.

Installing One97 Communications

Tech writer and reporter Vijay Menon has written on the cutting-edge trials or uncharted territories in over 20 Indian firms, such as Tata, L&T, Catrage, Asian Paints, Infosys, and HDFC Bank, in his book “Innovation Stories in India Inc.” mentioned. A chapter about Paytm is included as well. Within the text, he says:

Vijay Shekhar made a website for the Indian tourism sector while he was a college student. Afterwards, the website was purchased by a media business in Delhi. Subsequently, Vijay Shekhar Sharma received a salary and was appointed as the company’s chief technology officer. He spent more than a year working for a private corporation before this. The parents were ecstatic after that. as their concerns about money were somewhat allayed.Two years later, after working for a media firm for about a year as the head of technology, he felt compelled to return to the venture. He founded One97 as a business. Although the company’s personnel were situated in Noida, it was registered in Delhi.

His company provided users with value-added services including astrology, news, humor, and cricket updates throughout the SMS era. The communications industry in the nation expanded along with his company.Private enterprises were given access to 2G spectrum in 2007 by the administration of the United Progressive Alliance. In a matter of years, over a dozen businesses nationwide were vying for clients. Prepaid users now face a new recharge issue as a result of this.

Sharma introduced ‘Paytm’, a mobile balance top-up service, in 2009. In addition, the consumer has the option to pay for the goods using a credit card or bank account. We may get additional annual details in Paytm’s Stock Market Compendium (Page No. 2018). Consequently: The RBI authorized Paytm in 2013. The following year, Paytm released its iOS and Android applications. According to Vijay Shekhar, banks and telecom companies had no interest in utilizing mobile devices for more than 100–200 minor financial transactions. He was successful in using wallet licenses and applications to occupy this sector.

Sharma introduced “Paytm,” a mobile balance top-up service, in 2009. In addition, the consumer has the option of using a credit card or bank account to pay for the items. You may find more annual data at Paytm’s Stock Market Compendium (Page No. 2018). Consequently: The RBI gave Paytm approval in 2013. The next year saw the release of Paytm’s iOS and Android apps.

Rs. Telecom companies and banks, according to Vijay Shekhar, had no interest in utilizing mobile devices for any purpose other than 100–200 small-scale financial transactions. By using wallet licenses and applications, he was able to seize control of this business. But in the middle of all of this, something happened in the history of the nation’s economy. It is not referenced in any of Paytm’s official documentation. However, BDM benefited immensely from its phenomenal growth.

The Modi government’s action

Vijay Shekhar desired to link Paytm and cash transactions. The federal government’s action brought his idea to life.

The ‘NAMO’ government of Prime Minister Narendra Modi stated in the evening of November 8, 2016, that the Rs. 500 and Rs. 1,000 rupee notes had been declared worthless. In English, this was referred to as “demo” or devaluation.Over 85% of the nation’s banknotes were taken out during the course of the night. Two months were spent on this process. Months passed while the effects persisted. People so attempted alternatives like credit cards, internet banking, and online shopping in the nation’s primarily cash-based economy.

E-wallet transactions, nevertheless, are the most effective and well-liked choice for modest financial transactions. Paytm is the best e-wallet, despite the existence of other others like Freecharge and Mobiquik. Paytm expressed its gratitude to Prime Minister Narendra Modi by showcasing his image in full-page ads that were printed in national newspapers. However, the devaluation drew harsh criticism for the prime minister.

In the three months following the announcement of demonetisation, the number of Paytm users increased by fifty percent. Approximately 19 crore low- and middle-income accounts have joined the Paytm network. The app’s application languages, in addition to English, include Hindi and the national regional languages. As a result, even those with limited literacy or no command of English could utilize it with ease.

The company’s revenue in 2015 was Rs. 336 crores. In March 2017, it grew to 828.6 crores. Every day, 30 crore consumers complete 7 million transactions on average. It has a 9.4 billion dollar value. Due to this remarkable growth, additional funding was needed for personnel recruiting, infrastructure and information expansion, advertising, and marketing. Paytm’s worth surpassed $4.86 billion in December 2016 following investments from Chinese tycoon Jack Ma’s Ant Financial and the storied Japanese bank Softbank.

Sharma, who is 38 years old, became the youngest business owner in the nation as a result of his involvement in the company. His property was valued $1 billion, $30 million, at the time. Sharma kept his position as an individual shareholder in Paytm’s Payments Bank by selling his one percent interest. Subsequently, a covert video with Ajay Shekhar Sharma, the vice-chairman of Paytm and brother of Vijay Shekhar, was made public. In it, he claimed to have ties to the BJP’s parent group, the Rashtriya Swayamsevak Sangh (RSS), and to have informed the Prime Minister’s Office about stone-pelters in Kashmir ruled by India.

In addition, Ajay Shekhar stated that the Prime Minister has been given priority on Paytm’s website and app. Data privacy for Paytm customers was questioned following his attack.

Public debt

Paytm offers services for purchasing tickets for movies, buses, trains, flights, and shopping; Additionally, settle your credit card, phone, internet, gas, electricity, and water bills; Paytm has made an attempt to become a one-stop shop for various services by providing DDH, Mobile Recharge, and Fastac. In addition, Paytm offers mutual funds, digital gold, general and life insurance, as well as personal, business, house, and auto loans.

Aside from the company’s e-commerce platform, 40 crore users were averaging 2.5 crore financial transactions every day at one point. The early investors in the company intended to sell some of their shares, as is common in business, therefore the well-known IPO (early Public Offer) or public offering was conducted.

Experts have rated those stocks to stay away from since there is no certainty of profits. But people did apply to be registered publicly. The business has raised Rs. 18,300 crores out of this. The allotted shares of Rs. 2,150 decreased by 27% from nine on the first day. The company’s market capitalization decreased by Rs 39,000 crore on the day of listing.

Vijay Shekhar’s company received funding from Berkshire Hathaway, the well-known American investor Warren Buffett’s company. Investors from China and Japan also made their shares available for public offering during the IPO. However, they apparently sold their interest shortly after the RBI’s March 2023 order. To grow the business, Vijay Shekhar Sharma sought a number of investors in 2013. American Express started showing interest in his business at that point. Ashneer Grover represented the corporation. He founded the mobile wallet startup Bharat-Pay.Grover believed that money from Chinese investors had been released at the expense of Indian investors by the time Vijay Shekhar’s company went public.

Following the RBI directive, Vijay Shekhar announced in a social media message that the Paytm app will stay functional even after the deadline. The stock markets have seen Paytm’s price decline in spite of his assurance. There’s no specific word on when or how it will end.

Even after overcoming these setbacks, it has proven difficult to endure in the competitive landscape against companies like Walmart’s Fonpay, WhatsApp’s financial transaction platform Meta, and Amazon’s Alphabet payment app.