On Thursday, Paytm witnessed a significant decline in its market value as it was instructed by the RBI to cease its operations at Paytm Payments Bank. This resulted in a loss of one-fifth of its market value.
New Delhi: Paytm, a digital payments company, experienced a significant decline in its market value on Thursday following the Reserve Bank of India’s (RBI) directive to suspend operations of its associate, Paytm Payments Bank. This development triggered a wave of humorous memes on the internet, with a majority of them targeting Paytm stockholders.
According to reports, Paytm’s stock plummeted to a six-week low of ₹ 609, resulting in a loss of approximately $1.2 billion in company value. This decline occurred just one day after the RBI imposed restrictions on Paytm Payments Bank.
The stock experienced a 20% decline, reaching the lower limit of its daily trading range set by the exchange.
Paytm stated that it anticipates a potential negative impact of ₹300 crore to ₹500 crore on its annual earnings due to the Reserve Bank of India’s directive. The company is actively taking measures to comply with the RBI’s instructions and remains optimistic about its ability to enhance profitability.
On a previous day, the central bank informed Paytm Payments Bank that it would no longer be permitted to accept new deposits, facilitate credit transactions, or provide fund transfers, including the Unified Payments Interface (UPI) feature, after February 29, 2024.
The RBI stated, “No additional deposits, credit transactions, or top-ups will be permitted in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc., after February 29, 2024, except for any interest, cashbacks, or refunds that may be credited at any time.”
According to the RBI, it had instructed Paytm Payments Bank to halt the onboarding of new customers in March 2022. However, a Comprehensive System Audit report and subsequent compliance validation report from external auditors revealed ongoing non-compliance and significant supervisory concerns within the bank, necessitating further supervisory action. The RBI did not disclose specific details regarding these concerns.