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Paytm shares tumble after RBI bars its payments bank from accepting new customers

RBI statement said action against Paytm Payments Bank based on “material supervisory concerns” & restrictions will continue pending an audit of its information-technology systems.

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Shares of Paytm dropped as much as 13% after the Reserve Bank of India barred the digital payments company’s Paytm Payments Bank venture from accepting new customers.

The action by the RBI is based on certain “material supervisory concerns” and the restrictions will continue pending a comprehensive audit of its information-technology systems, the central bank said in a statement on Friday.

Paytm Payments Bank is a joint venture of One 97 Communications Ltd., which is commonly known as Paytm, and the company’s founder Vijay Shekhar Sharma.

The company is taking steps to comply with the central bank’s directive, including the appointment of an external auditor, it said in a statement on Saturday. Existing customers will be unaffected.

The stock traded down 11% at 686 rupees at 9:20 a.m. in Mumbai after earlier falling to 675 rupees.

Paytm Payments Bank started its operation in November 2017 after getting its license in 2015. Sharma spearheads the bank’s strategy and vision, according to its website, and has played a vital role in the evolution of mobile payments in India.

Separately, Morgan Stanley analyst Sumeet Kariwala cut the recommendation on One 97 Communications to equal-weight from overweight. It has a price target to 935 rupees.

The company has four buy, two hold and three sell recommendations, according to Bloomberg data, with average price target of 1,230.56 rupees. – Bloomberg.


Also read: LIC IPO will get pushed to next fiscal if Modi govt doesn’t take call on timing in a day or two


 

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