Paytm Shares Plummet 20% as RBI Imposes Restrictions on Payments Bank

Paytm, the digital payment giant, has seen a steep decline of 20% in its share price, hitting its lowest point in over a year. Investors and industry observers are closely watching the aftermath of the Reserve Bank of India's (RBI) recent intervention.

The downturn in Paytm's share price continued for the second consecutive session, with the stock opening at a 20% lower circuit at ₹487.05, compared to the previous close of ₹608.80 on the Bombay Stock Exchange (BSE). This sharp decline follows the RBI's action against Paytm Payments Bank (PPBL) on January 31.

The RBI's move came after a system audit report and subsequent compliance validation report by external auditors. The central bank imposed restrictions on Paytm Payments Bank, preventing it from accepting deposits or top-ups in any customer accounts, wallets, or FASTags after February 29. Citing section 35A of the Banking Regulation Act, 1949, the RBI also mandated the termination of Nodal Accounts of One97 Communications and Paytm Payments Services Ltd.

In response, Paytm affirmed its commitment to comply with the RBI's directives promptly. The company acknowledged an anticipated worst-case impact of ₹300 to 500 crores on its annual EBITDA going forward. Despite the challenges, Paytm expressed confidence in its ability to continue on the path of improving profitability.

One 97 Communications (OCL), the parent company of Paytm, announced in an exchange filing that it would collaborate with other banks instead of Paytm Payments Bank (PPBL). The company revealed plans to accelerate its existing partnerships with other banks, emphasizing that Paytm would exclusively collaborate with other banks, distancing itself from PPBL.

OCL addressed the RBI's directive regarding the termination of the nodal account by February 29, stating that both OCL and Paytm Payments Services Limited (PPSL) are actively in the process of shifting the nodal account to other large commercial banks.

Investors and industry experts are closely monitoring the situation, awaiting further developments and Paytm's strategic moves to navigate the challenges posed by the RBI's restrictions on its payments bank.