In a shocking turn of events, Paytm, one of India’s leading digital payment platforms, is facing a severe setback following a recent directive from the Reserve Bank of India (RBI). The central bank has ordered Paytm Payments Bank Ltd (PBBL), the banking wing of Paytm, to cease accepting deposits, offering credit services, and facilitating fund transfers from March 1, citing “persistent non-compliance” issues highlighted by an external audit.
The RBI’s order has sent shockwaves through the financial market, triggering a steep decline in Paytm’s shares. The stock, which stood at ₹761.4 on Wednesday afternoon, plummeted to ₹609 the next day and further dropped to ₹487.2 as markets opened this morning. This decline erased a staggering $1.2 billion in market value, leading analysts to speculate on the potential demise of Paytm Payments Bank.
Paytm founder Vijay Shekhar Sharma took to social media on Friday to reassure the platform’s 300 million users, stating, “Your favorite app is working and will keep working beyond February 29 as usual.” Despite the RBI’s restrictions, Sharma emphasized the commitment of the Paytm team to serve the nation in full compliance, expressing confidence in India’s continued success in global payment innovation and financial services inclusion.
PBBL has also assured its customers that their money is “safe,” emphasizing that the RBI directive does not impact existing balances. Existing customers can continue to utilize account balances, including savings and current, “without restriction” up to the available limit. However, the bank acknowledged that customers would no longer be able to deposit money into their accounts or transfer funds to wallets linked to those accounts after February 29.
Paytm, which holds a 49 percent stake in PBBL, listed on the Mumbai stock exchange in November 2021. Since its initial public offering, the company’s shares have faced a turbulent journey, witnessing a decline of more than 70 percent amid concerns over profitability and regulatory issues.
In response to the RBI’s directive, Paytm announced on Thursday that it is taking “immediate steps” to comply with the regulatory demands. However, the company also warned of a potential annual “worst-case impact” of nearly $60 million on earnings.
As Paytm grapples with regulatory challenges, the future of its operations remains uncertain. The once-dominant player in India’s digital payment landscape now faces a critical juncture that could reshape the trajectory of the company in the coming months. Investors, regulators, and users alike will closely monitor developments to see how Paytm navigates these turbulent waters.
Sources By Agencies
