On the BSE Sensex, the share price of Paytm plunged more than 12% to an all-time low of Rs 672 a share on Monday. Shares of One 97 Communications, Paytm’s parent firm, plummeted after the Reserve Bank of India (RBI) prohibited Paytm Payments Bank from accepting new clients and requested a thorough examination last week.
Paytm Payments Bank was established in 2017 to assist Paytm in reaching tens of millions of Indians who utilise mobile phones and low-cost data services in the world’s fastest-growing internet services market but lack access to the traditional banking sector.
Why is Paytm’s share price falling?
The latest tumble in the company’s share price is on account of a ban by the Reserve Bank of India (RBI) on Paytm Payments Bank from onboarding any new customers. RBI said in a statement Friday that it had taken the action based on certain “material supervisory concerns”, but did not detail the concerns.
The current drop in the company’s share price is due to the Reserve Bank of India (RBI) prohibiting Paytm Payments Bank from accepting new clients. The RBI stated in a statement Friday that it took the measure due to “material supervisory concerns,” but did not elaborate.
The RBI has also asked the payments bank to hire an IT audit company to perform a thorough System Audit of its IT system. “Paytm Payments Bank Ltd’s onboarding of new clients would be subject to particular approval to be given by RBI after considering the report of the IT auditors,” the RBI stated. Paytm Payments Bank stated in its statement that it was working with the banking authorities to resolve the issues. “We will contact you when we resume the establishment of new accounts after receiving RBI permission.” “We will tell you once we have received RBI authorisation to resume the establishment of new accounts,” it stated.
In February, Vijay Shekhar Sharma, the founder and CEO of the fintech business Paytm, was held in New Delhi for a traffic accident. According to reports, the New Delhi police have filed a complaint against Sharma for “rashness and careless driving.”
Sharma, the creator of payments giant Paytm, controls 51% of Paytm Payments Bank, while One97 owns the other 49%.