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  • Voltaire Staff

Paytm market value down by $2.5 billion since RBI crackdown; traders warned against app use



Beleaguered fintech firm, Paytm witnessed a 10 per cent decline in its shares on Monday, nearing an all-time low.


The fall is a continuation of the firm's last week's downturn, primarily driven by regulatory actions against its banking unit, Paytm Payment Bank.


Paytm parent company, One 97 Communications Ltd, experienced a consecutive 20 per cent drop on Thursday and Friday, leading to a total three-day decline of 42 per cent, reported Reuters.


Since the Reserve Bank of India instructed Paytm Payments Bank to halt new deposits from March, Paytm's market value has plummeted by $2.5 billion, a 43 per cent decline.


On Monday, its stock reached 438.5 rupees ($5.28), nearing its previous all-time low of Rs 438.35 in November 2022.


The company's troubles seem to get compounded in the future since an Indian traders' body has called on its members to stop using Paytm app altogether.


"The Reserve Bank of India (RBI) has imposed certain restrictions, prompting CAIT to recommend that users take proactive measures to protect their funds and ensure uninterrupted financial transactions.


"Large number of small traders, vendors, Hawkers  and women are making payments through Paytm and as such RBI restrictions on Paytm could lead financial disruption to these people," the Confederation of All India Traders said in a press statement.


It added, "Our advisory is a precautionary measure to protect the financial interests of traders in light of recent developments. We encourage users to stay informed and take proactive steps to ensure the security of their funds."


In an exchange filing on Sunday, Paytm refuted any ongoing investigation by the Enforcement Directorate into the company, its affiliates, or its founder and CEO, Vijay Shekhar Sharma, regarding anti-money laundering activities.


The company clarified that the recent directive from the RBI is a component of the continuous supervisory engagement and compliance procedures.


The RBI has identified numerous accounts at Paytm Payments Bank that were established without adequate identification.


Reportedly, three reliable sources have disclosed that the RBI has conveyed this information to the nation's financial crime enforcement agency. There is a concern within the RBI that certain accounts may have been utilized for money laundering activities, as per sources.


Sanjay Malhotra, India's Revenue Secretary, told Reuters on Saturday that the financial crime enforcement agency will conduct an investigation into Paytm Payments Bank if any new allegations of fund misappropriation emerge.


Paytm is reportedly engaging in preliminary discussions with HDFC Bank and Jio Financial Services regarding the potential sale of its wallets business, currently housed within Paytm Payments Bank, as per the Hindu Business Line.


Following a stock decline on Thursday and Friday, India's stock exchanges have reduced Paytm's daily trading limit from 20 per cent to 10 cent.

 

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