BENGALURU, Feb 2 (Reuters) – Indian digital payments firm Paytm, opens new tab saw its shares plunge by its daily limit of 20% for a second straight day after the central bank ordered its banking arm to stop taking fresh deposits.
The Reserve Bank of India (RBI) said it the action was taken due to non-compliance with rules, which a source with knowledge of the matter said had stretched over years.
Paytm Payments Bank, which is 49% owned by Paytm, has been told to stop accepting deposits in its accounts or popular digital wallets from March.
It’s unclear if Paytm will be able to find new banking partners for the 330 digital wallet accounts housed at Paytm Payments Bank. If Paytm doesn’t, users will not be able to add more money to the wallets, which let customers to store money for retail payments.
Since the RBI’s order on Wednesday, Paytm shares have lost 36% and were trading at 487.2 rupees on Friday morning, near record lows marked in 2022, and valuing the company at $3.7 billion.
Paytm CEO Vijay Shekhar Sharma took to social media to reassure users.
“Your favourite app is working, will keep working beyond 29 February as usual,” he said in a post on X.
“For every challenge, there is a solution and we are sincerely committed to serve our nation in full compliance,” Sharma added.
On Thursday, Bhavesh Gupta, president and chief operating officer of Paytm, said on a call that Paytm expects to get back to normalcy by March, “if not earlier”.
He added that the company had been holding discussions with the RBI and those have been on the “positive side”.
Kranthi Bathini, director equity strategy at WealthMills Securities, said while the impact of the order would be huge in the short-term for Paytm which “barely makes a profit”, in the long run it could improve.
“Paytm is a leading digital payments firm in the country with a wide reach both in urban as well as rural space which would help it,” he said.
