After the RBI imposed a ban on onboarding new customers to Paytm Payments Bank on Saturday, the company stocks have seen almost a 70 per cent decline from their all-time high price. To further add, the firm’s troubles were compounded over the weekend after news broke that founder and chief executive Vijay Shekhar Sharma had been briefly detained last month after crashing into a senior police officer’s car in the capital New Delhi and fleeing the scene.
The One 97 Communications Paytm stock, now valued at less than one-third of its initial offer price, sank to an all-time low on Monday, eventually settling 13 per cent lower at Rs 674.80 on the National Stock Exchange. In Tuesday’s opening trade, it shed another 7.12 per cent and is currently trading at Rs 627.75.
Today is the second day where the Paytm shares continued to see a free-fall after RBI ban. Currently, the stock is trading 68 per cent down from its all-time high of Rs 1961.05 while on a year-to-date basis the stock is down almost 50 per cent. The company has lost more than Rs 89,185 crore in market capitalisation since the IPO.
RBI Bans Customer Acquisition for Paytm Payments Bank
The Reserve Bank of India (RBI) on Saturday directed Paytm Payments Bank to stop taking on new customers with immediate effect, citing “material supervisory concerns observed in the bank.”
The bank has also been directed to appoint an audit firm to conduct a comprehensive audit of its IT system, the Reserve Bank of India said in a statement.
This is the second time that Paytm is facing a regulatory ban. In June 2018, RBI had made certain observations about the processes the company followed to acquire new users, especially in relation to know-your-customer (KYC) norms.
Paytm on RBI Ban
Responding to the regulatory action taken by the central bank, the Paytm Payments Bank spokesperson said, “The Bank is taking immediate steps regarding the RBI’s decision. PPBL remains committed to working with the regulator to address their concerns as quickly as possible. PPBL’s existing customers can continue to enjoy the benefits of seamless banking and digital payments services without interruption. The savings of existing users in their PPBL account, their fixed deposits with partnered banks, and the balance maintained in their Paytm Wallet, FASTag or wallet card and UPI services are completely safe and functional.”
Report on Paytm Alleges China Link
News agency Bloomberg had reported that the RBI or Reserve Bank of India had found the company’s servers sharing information with China-based entities that indirectly own a stake in the Paytm payments bank.
Bloomberg citing sources said, the annual inspections by the Reserve Bank of India found that the company’s servers were sharing information with China-based entities that indirectly own a stake in Paytm Payments Bank.
Paytm on Data Leak
However, The company put out a denial on Monday. “Paytm Payments Bank is proud to be a completely homegrown bank, fully compliant with RBI’s directions on data localisation. All of the Bank’s data resides within India,” the company said.
RBI to Punish Paytm?
According to an ET report, the RBI would set the terms of reference for an independent technology audit of Paytm Payments Bank after the regulator banned the onboarding of new customers for alleged violations of customer acquisition and privacy rules that may have included possible data flow to companies of Chinese origin.
Over the next few days, Paytm Payments Bank will submit to the regulator for its approval several names as potential audit candidates, and the regulator may finalise the terms of reference based on its findings that include a series of lapses in meeting the Know Your Customer (KYC) norms, ET said citing sources.
Paytm Payments Bank is a joint venture between Paytm and Sharma. China’s Alibaba Group Holding Ltd. and its affiliate, Jack Ma’s Ant Group Co., own shares of Paytm, according to exchange filings.
Read all the Latest Business News and Breaking News here
Comments
0 comment