Paytm’s stock has faced a third consecutive day of decline, driven by concerns that the Reserve Bank of India is contemplating revoking the license of Paytm Payments Bank Ltd. The central bank has identified several lapses, including multiple transactions breaching regulatory limits, raising money-laundering concerns. This development adds to the mounting troubles at the once-celebrated fintech startup.
The market value of Paytm has plummeted to about $3.4 billion, representing an 80% decrease from its late 2021 stock market debut. The regulator’s actions on Paytm’s banking arm, in which founder Vijay Shekhar Sharma owns a 51% stake, pose a significant challenge to the company’s reputation. Furthermore, it necessitates the urgent need for Paytm to find new partners to mitigate the impact on its core digital-payments business.
On January 31, the Reserve Bank of India issued an order restricting Paytm Payments Bank from taking deposits or allowing top-ups after February 29. There is also the possibility of the banking regulator scrapping the bank’s license as early as March. Paytm has reassured investors that neither the company nor its founder, Vijay Shekhar Sharma, is under investigation by the country’s anti-money laundering agency. However, these statements have done little to alleviate investor concerns.
In response to the regulator’s latest actions, Paytm announced last week that it plans to expand its relationships with third-party banks to enhance its business and move towards profitability. The company also addressed what it referred to as “market rumors,” asserting that Vijay Shekhar Sharma “has not taken any margin loans, or otherwise pledged any shares that are directly or indirectly owned by him.” The unfolding situation reflects the challenges and uncertainties facing Paytm, a once-celebrated player in India’s fintech landscape.
