In the past 11 trading days since the turmoil commenced following RBI’s ban on the Paytm Payments Bank, Paytm has witnessed a significant downturn, losing approximately Rs 27,000 crore in value. This equates to a staggering 57 percent decline in its market worth during this period.
As the aftermath of RBI’s ban on the Paytm Payments Bank, which encompasses the Paytm wallet, unfolded, Paytm’s market value experienced a sharp decline. Over the course of the last 11 trading days, the company’s value plummeted by around Rs 27,000 crore, marking a substantial 57 percent decrease.
Continuing its downward spiral, Paytm shares experienced a nearly 2 percent decline on February 16, reaching a new record low of Rs 318.05 on the NSE. The latest slump followed reports of the Enforcement Directorate’s interrogation of senior company executives and the collection of documents from them in response to the recent RBI directive barring Paytm Payments Bank Ltd (PPBL) from accepting deposits or top-ups in any customer account.
During the preceding session, shares of the beleaguered fintech company had triggered a 5 percent lower circuit. Over the course of the last five trading sessions, Paytm shares have witnessed a dramatic 23 percent decline, resulting in substantial erosion of investors’ wealth.
In light of the recent developments, Paytm has now witnessed a staggering loss of about Rs 27,000 crore, equivalent to a 57 percent decrease in its market value, over the past 11 trading days. This downward trend ensued subsequent to the RBI’s crackdown on Paytm Payments Bank, citing “persistent non-compliances and continued material supervisory concerns” regarding the platform that also houses the Paytm Wallet.
The regulatory investigation uncovered significant irregularities in Know Your Customer (KYC) procedures, exposing customers, depositors, and wallet holders to substantial risks. Specifically, the investigation revealed that thousands of cases featured the same Permanent Account Number (PAN) linked to over 100 customers, with some instances exceeding the alarming threshold of 1,000. This revelation underscores the severity of the lapses in KYC compliance, posing serious concerns for the security and integrity of the affected individuals’ financial transactions and personal information.
The cumulative value of transactions, amounting to crores of rupees, significantly surpasses regulatory thresholds for minimum KYC pre-paid instruments, raising alarming concerns about potential money laundering activities.
Sandeep Tandon of Quant MF highlighted the emergence of an “unknown risk” affecting Paytm, which has precipitated a prolonged downturn in the company’s stock and resulted in the erosion of its market capitalization. Despite expressing confidence in Paytm’s concept at present levels, Tandon emphasized the looming regulatory risk associated with the company’s operations in an interview with CNBC-TV18.
As per the insights of the veteran investor, the Paytm stock is currently heavily owned by private equity entities who are actively divesting their stakes at various levels. This consistent offloading of shares by private equity investors has resulted in heightened selling pressure on the stock.
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