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2 Feb 2024 7:04 AM GMT
Summary
The RBI has issued an order banning much of the business of the financial digital palaform citing persistent non-compliance and supervisory concerns
The Reserve Bank of India's ban on much of the business of Paytm has played spoilsport on One97 Communication, the parent company of the troubled bank. The stock markets on Friday witnessed the crash of the stocks over 20 per cent. Ever since the ban imposed by the central bank, the stock of Paytm, the digital payment giant, has been on a downward course. In the past two days, market valuation of company plunged 40 per cent or Rs 285.
Paytm's parent company, One97 Communication, said in a statement to the exchanges that it will transfer all Paytm Payments Bank (PPB) accounts to other banks, ensuring a seamless process for all stakeholders.1 day ago
The RBI has issued an order banning much of the business of the financial digital palaform citing persistent non-compliance and supervisory concerns.Paytm’s shares plunged 20 per cent for a second day, continuing a slump triggered by India’s central bank banning much of its business.
A conference call held after market hours on Thursday failed to inspire investor confidence. At least five brokerages, including JPMorgan Chase & Co. and Citigroup Inc., downgraded the stock to sell.The two-day decline has erased over $2 billion (Rs16, 568 crore) in market value in the company. It is likely to hit the stocks of the major investors of the company including Alibaba’s Antfin Singapore Holding Pte. and SoftBank Group Corp.
.“The order materially impacts Paytm’s core payments business at 59 per cent of revenue,” said a leading analyst on condition of anonymity. While this is likely to have less impact on its other businesses, it dilutes the network effects of Paytm’s “merchant-consumer” ecosystem and brand credibility over time, unless the company can successfully migrate its business to other banks, they said.Paytm is now down about 77 per cent from its initial public offering in 2021. The company said in the recent conference call that operations should be back to “fully normal” by early March and it is accelerating plans to partner with other banks.
