Paytm Payments Bank has been banned by the Reserve Bank of India (RBI), after which Paytm shares have seen a fall of 20 percent. Paytm is trading at Rs 608.80 with a decline of 20 percent on BSE.
A report from Motilal Oswal Financial Services described the business outlook as uncertain and said the stock has been downgraded to neutral.
Paytm has a subsidiary, Paytm Payments Bank Limited (PPBL), and has more than 100 million customers. It has 30 million bank account holders, 300 million wallet users and 17 percent market share by value in Fast Tags.
On March 11, RBI in its press release had directed Paytm Payments Bank Limited (PPBL) to stop onboarding customers. The regulator has taken this strict step citing persistent non-compliance concerns.
Strict steps have been taken by RBI on January 31, 2024, in which RBI has significantly limited the scope of business activities for Paytm Payments Bank Limited (PPBL).
Recently Paytm has announced that it is planning to shrink its operator Paytm Payments Bank Limited (PPBL) and is working to increase business and personal loans to mitigate the impact. The report said that in this background, the latest measures on its business outlook create serious concerns and harm the confidence of many investors.
It is being told that RBI’s instructions will not have any impact on Paytm merchants. Therefore, Paytm merchants do not need to worry after the instructions given by the Reserve Bank of India (RBI). Paytm Soundbox, EDC machines, QR will continue to function as usual and merchants will still be able to accept payments. Paytm provides acquisition services to merchants in partnership with many leading banks in the country. Paytm will continue to expand third-party bank partnerships.
The fintech company said, “Whatever instructions the Reserve Bank of India (RBI) has given to Paytm, it will not have any impact on the device business like Paytm Soundbox, EDC, QR and Paytm’s offline merchant network offering.” ,
Paytm’s associate bank Chairman and COO Bhavesh Gupta said during a conference call on the instructions of RBI, “We will take whatever is the right approach in this matter and we will ensure that merchants do not have to face much trouble.” ,
Meanwhile, Paytm clarified that Paytm Payments Bank Limited (PPBL) is independently run by its management and board.
In an exchange filing, Paytm said, “Paytm Payments Bank Limited is independently run by its management and board in accordance with banking regulations. As a part of the shareholder agreement, OCL is allowed to hold two board seats on the board of Paytm Payments Bank Limited. OCL does not have any influence on the operations of Paytm Payments Bank Limited other than as a minority board member and minority shareholder.”