Paytm fell to 487 Indian rupees, or $5.88 within minutes of the market opening, the lowest it has hit in 55 weeks. Paytm shares also fell 20% on Thursday. Paytm, which currently has a market cap of $3.73 billion, has lost $2.1 billion in its market cap in two days.
In Press Release dated March 11, 2022, the Reserve Bank of India (RBI), in exercise of its powers under section 35A of the Banking Regulation Act, 1949, had directed Paytm Payments Bank Ltd (PPBL or the bank) to stop onboarding of new customers with immediate effect.
The Comprehensive System Audit report and subsequent compliance validation report of the external auditors revealed „persistent non-compliances and continued material supervisory concerns in the bank, warranting further supervisory action” – RBI said.
Accordingly, in exercise of its powers under section 35A of Banking Regulation Act, 1949 and all other powers enabling it in that behalf, the Reserve Bank of India, has today directed PPBL as below:
. No further deposits or credit transactions or top ups shall be allowed in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc. after February 29, 2024, other than any interest, cashbacks, or refunds which may be credited anytime.
. Withdrawal or utilisation of balances by its customers from their accounts including savings bank accounts, current accounts, prepaid instruments, FASTags, National Common Mobility Cards, etc. are to be permitted without any restrictions, upto their available balance.
. No other banking services, other than those referred in (ii) above, like fund transfers (irrespective of name and nature of services like AEPS, IMPS, etc.), BBPOU and UPI facility should be provided by the bank after February 29, 2024.
. The Nodal Accounts of One97 Communications Ltd and Paytm Payments Services Ltd. are to be terminated at the earliest, in any case not later than February 29, 2024.
. Settlement of all pipeline transactions and nodal accounts (in respect of all transactions initiated on or before February 29, 2024) shall be completed by March 15, 2024 and no further transactions shall be permitted thereafter.
At $3.7 billion market cap, Paytm is being valued at less than a third of its private rival, Walmart-backed PhonePe. PhonePe, which raised $850 million last year at a valuation of $12 billion, does less than half of Paytm’s revenue. Also, Paytm has raised more than $5 billion in private rounds and IPO.
Market analysts are having a tough time revising their price target for the Paytm stock. Morgan Stanley in a note to clients Friday said it was cutting its price target of Paytm to 555 Indian rupees, from 690 on Thursday.
The Indian central bank may also not yet be done with its penalties on Paytm. It has internally discussed revoking the payments bank license of Paytm.
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Today, more than 20 Million merchants & businesses are powered by Paytm to Accept Payments digitally. This is because more than 300 million Indians use Paytm to Pay at their stores. And that’s not all, Paytm App is used to Pay bills, do Recharges, Send money to friends & family, Book movies & travel tickets.
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