On Monday, shares of One97 Communications, the parent company of fintech firm Paytm, plummeted to a new 52-week low, as it was predicted post RBI curb.
On Monday, shares of One97 Communications, the parent company of fintech firm Paytm, plummeted to a new 52-week low, as it was predicted post RBI curb.
Paytm’s stock was trading at Rs 683 per share at 10 a.m., 13% down from Friday’s closure. During the early trading hour on the NSE, it hit a low of Rs 672.
Paytm shares have lost more than two-thirds of their value since their initial public offering (IPO) price at Rs 2150. Similarly, its market capitalization has dropped to about Rs 44,200 crore, down from Rs 1.39 lakh crore when the company was listed on the stock markets.
Paytm’s stock was listed in the stock markets in November last year at a discount of more more than 9%, and it dropped more than 20% in the first 15 minutes of trade. The stock finished the first session at Rs 1,564 with 27% down.
Paytm has a ‘underperform’ rating from brokerage company Macquarie, with a target price of Rs 700.
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Following regulatory concerns, the Reserve Bank of India (RBI) has stopped Paytm Payments Bank from onboarding new clients with immediate effect.The top bank has ordered that an IT audit firm be hired to perform a complete system audit of company’s IT system.
According to an RBI circular released on Friday, “Reserve Bank of India has today (March 11), in exercise of its powers, inter alia, under section 35A of the Banking Regulation Act, 1949, directed Paytm Payments Bank Ltd to stop, with immediate effect, onboarding of new customers. The bank has also been directed to appoint an IT audit firm to conduct a comprehensive System Audit of its IT system.”
It went on to say that Paytm Payments Bank’s onboarding of new clients would be subject to particular approval from the RBI, which would be given after the IT auditors’ report evaluation. According to the bank, this move is based on “some serious supervisory concerns.”
While the RBI did not specify why the business is not allowed to onboard new clients, this is not the first time the regulator has taken such action. Paytm Payments Bank reportedly stopped registering new clients in August 2018 after an RBI audit indicated that the company was not following appropriate know-your-customer (KYC) rules when it came to gaining new consumers.
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