The share price of One97 Communications, the parent company of Paytm, experienced a major fall in today’s trading session after somewhat recovering from heavy losses in the past two trading days. At the start of today’s session, the stock opened higher at ₹525 per, up from the previous closing price of ₹496.25. However, the stock could not sustain this upward momentum and quickly declined ₹450 per share in early trade, marking a decline of 9.2%.
Paytm has been in the headlines for the last week after the Reserve Bank of India (RBI) barred Paytm Payments Bank from carrying out certain operations following a system audit report and subsequent compliance validation report by external auditors.
Also Read: Share prices of Paytm for second straight session, jumps 10% after Vijay Shekhar Sharma’s meeting with FM
Following this directive, Vijay Shekhar Sharma, the founder of Paytm, reportedly met with the Finance Minister the day after discussing a plan with the RBI to address these regulatory issues.
Despite Sharma’s efforts, reports suggest that the central bank has refused to offer any concessions to Paytm Payments Bank, such as allowing the migration of accounts to other banks or extending the February 29 deadline.
RBI’s restrictions on the bank were a big blow to the company, as the bank currently hosts more than 330 million wallet accounts, playing a pivotal role in the Paytm ecosystem. After RBI’s decision on February 1, Paytm shares fell 20% over the next two trading days. As a result, exchanges adjusted the circuit limit down to 10%. This downward trend continued on Monday.
However, there was a slight recovery on February 6 and 7, with the stock rallying nearly 13%. At its trading price of ₹463 at 09:45 am, the stock is trading at a 78% discount compared to its issue price of ₹2,150 per, posing challenges for investors who entered the stock during the initial public offering and have maintained their positions so far.
Also Read: Paytm CEO in talks with RBI over regulatory concerns, sources say
Meanwhile, Paytm also found itself under scrutiny as rumors surfaced suggesting that the company, along with its related company and CEO/founder, were under investigation by government agencies for possible violations of foreign exchange regulations and money laundering.
In response, Paytm vehemently denied these allegations, labeling them as baseless speculations. The company clarified that reports indicating investigations into violation of foreign exchange rules by Paytm or its related entity, Paytm Payments Bank Limited (PPBL), had no factual basis. Moreover, Paytm has previously refuted claims of any investigation by the Enforcement Directorate regarding OCL (One97 Communications Limited), its partners, or its management.
Also Read: RBI should respond to Paytm’s ‘velocity’ with banking reforms
While the RBI has placed severe restrictions on Paytm Payment banking operations, citing non-compliance with KYC guidelines and other issues; Paytm has informed that the RBI limits will not affect user deposits in its wallets, FASTags, NCMC accounts and savings accounts.
Disclaimer: We advise investors to check with certified experts before making any investment decisions.
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Published: 08 Feb 2024, 09:58 IST