The Reserve Bank of India (RBI) on Friday directed Paytm Payments Bank to stop onboarding new customers with immediate effect and conduct a comprehensive audit of its IT system, citing “material supervisory concerns.” Shares of One 97 Communications, the owner of payments platform Paytm, fell over 13% to their lowest levels in morning trade on Monday.
On the National Stock Exchange (NSE), the stock fell 13.30 percent to an all-time low of Rs 672.00 per share, while on the BSE, it fell 13.25 percent to Rs 672.10 per share. One 97 Communications’ stock was trading at Rs 701.00 at 11:24 a.m., down Rs 73.80 (9.53 percent), while it was trading at Rs 699.35 on the NSE, down Rs 75.70. (9.77 percent). According to BSE data, the company’s market capitalization was Rs 45,461.55 crore.
Paytm has been barred from onboarding new customers
According to data from the respective stock exchanges, over 64.43 lakh shares of Paytm have been moved on the NSE so far in the intraday sessions, while over 3.23 lakh shares have been traded on the BSE.
“Onboarding of new customers by Paytm Payments Bank Ltd will be subject to particular approval to be given by RBI after examining the report of the IT auditors,” the central bank said in a statement released after market hours on Friday.
According to the bank, this action is based on “some serious supervisory concerns.” According to Paytm’s IPO prospectus, Paytm Payments Bank, which has the greatest scale of all payment banks, had a net profit of Rs 17.88 crore on sales of Rs 1,987.84 crore for the year ending March 31, 2021. One97 Communications controls 49 percent of Paytm Payments Bank, while Vijay Shekhar Sharma owns the remaining 51 percent.
“Paytm’s recent limitation on adding new clients owing to possible holes in its technical systems is surely going to damage the business emotions,” Ravi Singh, Head of Research and Vice President at Share India Securities, stated in response to the drop. It will have a negative influence right away. Paytm, on the other hand, has already enrolled a sizable user base in the payments bank, but the prohibition may jeopardize its plans to upgrade to a small financing bank. In the medium term, the stock may face significant selling pressure and may reach Rs 500.”
“The broader market is in corrective mode,” he continued. New-age internet equities such as Zomato, Nykaa, and Paytm are also under a lot of pressure. This might go on for a few more trade sessions. If these equities decline another 3–5%, though, a purchasing opportunity may present itself. Investors may enter the market for the first time, keeping a long-term perspective in mind.”