Paytm stock plunges another 10%, firm loses 43% since RBI crackdown

One97 Communications’ Paytm stock price fell by 10% on Monday, February 5, 2024. This drop comes after a series of declines triggered by a regulatory crackdown by the Reserve Bank of India (RBI) on Paytm Payments Bank.

Since the RBI's action, Paytm has lost about 43% of its market value, or roughly $2.5 billion since the Reserve Bank of India (RBI) told Paytm Payments Bank on Wednesday to stop accepting fresh deposits in its accounts or popular wallets from March, which was a significant blow to the company's financial standing.

Now, the RBI's crackdown involved ordering Paytm Payments Bank to stop accepting new deposits from March onwards. This has raised concerns about the bank's future and its impact on Paytm's overall business model. However, the founder of the company, Vijay Shekhar Sharma has assured the customers about their funds.

Just shy of the previous all-time low of Rs 438.35, reached in November 2022, the stock dropped by its daily trading limit to Rs 438.5 on Monday.

The RBI's order caused a 20% decline in the stock on Thursday and Friday, which was its daily maximum. The order has significant implications for the operations of Paytm, the most popular digital payments service in India.

The sources have also revealed that Paytm is in preliminary discussions to sell its wallet division, which is a part of Paytm Payments Bank, with HDFC Bank and Jio Financial Services.

Here are some additional points:

The RBI's action was taken due to concerns about ‘certain supervisory concerns’ related to Paytm Payments Bank. The sources have claimed that the RBI is concerned that some of the accounts have been used for money laundering. However, Paytm has denied all the allegations and said that the company and Paytm has never been probed by Enforcement Directorate in past.

Paytm is currently appealing the RBI's decision. The outcome of this appeal could have a significant impact on the company's future.

The decline in Paytm's stock price is part of a broader sell-off in Indian technology stocks. However, the company's losses have been more severe than those of its peers.