Paytm market cap falls Rs 20,750 crore in 3 days after RBI crackdown

Paytm fall continue: Paytm's shares experienced a decline, losing Rs 20,750 crore in market value over three consecutive days, following a regulatory crackdown by the Reserve Bank of India (RBI).

The RBI instructed Paytm Payments Bank to halt new deposits in its accounts and digital wallets from March due to long-standing non-compliance with central bank regulations.

Concerns over customer due diligence, fund usage, and technology infrastructure prompted the RBI's action.

The regulatory move has impacted Paytm's brand, halted credit operations, and raised uncertainties about its earnings.

Sources indicate that the RBI found numerous accounts at Paytm Payments Bank created without proper identification, potentially involving money laundering. The Enforcement Directorate has received this information for further investigation.

Vinit Bolinjkar, Head of Research, Ventura Securities, highlighted the challenges Paytm faces, saying that its brand, credit operations, and earnings are at risk.

He suggested that a "white knight" might be needed to rescue the company's fortunes. Paytm denied any involvement in money laundering, and the Revenue Secretary mentioned that the Enforcement Directorate (ED) would investigate if fresh charges arise regarding improper fund syphoning.

Paytm's stock plummeted to a record low of Rs 438.35 on the Bombay Stock Exchange, triggering a 10 per cent daily limit drop.

Trading limits were narrowed to 10 per cent on Monday from 20 per cent after the stock's crash on the previous day. There are concerns that Paytm Payments Bank's digital wallet business might be unable to operate after February 29 unless the RBI approves a licence transfer to its parent company.

The regulatory crackdown raises the possibility of the RBI cancelling Paytm's licence.

State Bank of India (SBI) responded to the Paytm uncertainty by extending services to merchants and retailers through its payments subsidiary, SBI Payments Services.

SBI Chairperson Dinesh Kumar Khara expressed readiness to support the merchant community. 
Additionally, reports suggest that Paytm is in exploratory talks with HDFC Bank and Jio Financial Services to sell its digital wallets business housed under Paytm Payments Bank.

Paytm declined to comment on market speculation, while HDFC Bank and Jio Financial did not immediately respond to enquiries. Jio Financial's shares rose by 14.2 per cent following the report.

(With Reuters Inputs)