Amid escalating regulatory concerns, shares of One97 Communications, the parent company of the Paytm brand, witnessed a 3% decline on Monday, exacerbated by reports hinting at potential license cancellation for Paytm Payments Bank Ltd (PPBL) by the Reserve Bank of India (RBI).
According to sources, the RBI is contemplating an unprecedented move to revoke the banking license of PPBL, possibly appointing an administrator to oversee its essential operations. This development comes amidst mounting concerns over compliance issues and regulatory violations.
Shares of One97 Communications are currently trading 10.60 points lower at 403.85 per equity share, reflecting a 2.56% decrease. During Friday’s trading session, Paytm opened at Rs 424.05 and closed at Rs 425.45, with fluctuations between a high of Rs 430 and a low of Rs 410.05. Paytm’s stock has witnessed a considerable downturn from its 52-week high of Rs 998.3 to its low of Rs 318.35.
The downward spiral of Paytm’s shares follows reports of alleged financial improprieties, with the Financial Intelligence Unit of India (FIU-IND) imposing a hefty penalty of Rs 5.49 crore on PPBL for violations under the Prevention of Money Laundering Act (PMLA). The FIU-IND revealed that illicit proceeds were routed through bank accounts maintained by entities associated with PPBL.
Consequently, Vijay Shekhar Sharma, the founder of Paytm, tendered his resignation as part-time non-executive chairman and board member of the payments bank. Sharma, who holds a majority stake of 51% in PPBL, along with One97 Communications owning the remaining 49%, took preemptive measures ahead of the RBI’s March 15 deadline for PPBL to cease its operations.
Paytm has been under the regulatory radar since 2018 due to recurrent violations and non-compliance issues. The recent developments have cast a shadow over the future of PPBL and its banking operations, prompting stakeholders to closely monitor the unfolding situation.
As investors grapple with the uncertainty surrounding Paytm Payments Bank, regulatory interventions and impending decisions by the RBI could significantly impact the financial landscape of India’s burgeoning fintech sector.
