Paytm shares plunge 10% after RBI says action came after persistent non-compliance

Shares of One97 Communications, the parent company of Paytm, slipped further on February 8 afternoon after the Reserve Bank of India said that action against Paytm Payments Bank was taken after persistent non-compliance. At 1.11 pm, Paytm shares were trading at Rs 457.15 on the BSE, down by almost 10 per cent from the previous close.

Deputy governor Swaminathan J on Thursday said: “This is supervisory action for persistence non-compliance. Such action is invariably preceded by months and sometimes years of bilateral engagement where we point out the deficiencies but also give time to take corrective action. As a regulator, it is incumbent upon us to protect the consumer.”

On January 31, the RBI imposed curbs on the operations of Paytm Payments Bank and asked the digital lender to stop accepting deposits or credit transactions or top-ups in any customer accounts, prepaid instruments, wallets, FASTags, and NCMC cards after February 29.

On February 8, Governor Shaktikanta Das noted that the RBI, sometimes, gives more than sufficient time to comply.

"There is no worry about the (financial) system at the moment," Das said at the press conference held after announcing the RBI’s Monetary Policy Committee.

He added: "Such restrictions which we impose are always proportionate to the gravity of the situation. All our actions, being a responsible regulator, supervisor, are in the best interest of systemic stability and protection of depositors or customers' interest. These aspects can not be compromised."

Swaminathan added that Paytm app will not be impacted by RBI's action. "Just to clarify, the action is against Paytm Payments Bank, not against the Paytm app. The app is not impacted by our action," Swaminathan said.

Earlier it was reported that the RBI found that in many cases, the same PAN was linked to numerous customers. In some cases, it was noted that one PAN was linked to 100 customers, while in some cases to more than 1,000 customers. The total value of transactions, which is in crores, was much beyond the regulatory limits in minimum KYC pre-paid instruments as set by RBI.

At the stock market, Paytm stock on February 5 lost 42.4 per cent of its value or Rs 20,500 crore in market capitalisation. On February 7, Paytm ended 10 percent higher. On Wednesday, around 21 lakh shares, or 0.3 percent equity, worth Rs 103 crore changed hands.

Also read: Paytm Payments Bank crisis: Separate FAQ to come out on fintechs soon, says RBI Guv