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NEW DELHI: Paytm’s stock fell for a third straight day as India’s central bank considers scrapping the license of Paytm Payments Bank Ltd., adding to the mounting troubles at the once-celebrated fintech startup.
India’s banking regulator is weighing the removal of the permit after finding several lapses at Paytm Payments Bank including multiple transactions beyond regulatory limits, raising money-laundering concerns, Bloomberg News reported last week.The regulator has already ordered the bank to halt much of its business, potentially affecting the broader digital-payments pioneer’s prospects.
Paytm said the company and its founder Vijay Shekhar Sharma aren’t under investigation by the country’s anti-money laundering agency, although the statements did little to alleviate investor concerns. Paytm shares tumbled 10% Monday, the most allowed, pushing its declines over the past three trading days to more than 40%.
“In the past, certain merchants/users on our platforms have been subject to enquiries and on those occasions, we have always cooperated with the authorities,” Paytm parent One97 Communications Ltd. said in a disclosure to stock exchanges late Sunday. The company has also cooperated with state agencies on such probes, it added.
The unprofitable company’s market value has tumbled to about $3.4 billion — down about 80% from its stock market debut in late 2021. The Mumbai stock exchange over the weekend changed the daily move limit on Paytm shares to 10% after it plunged by 20% — the previous limit — on each Thursday and Friday.
India’s regulator stepping up its actions on Paytm’s relatively small banking arm is a blow to the broader firm’s reputation and means it needs to quickly find new partners to soften the impact to its core digital-payments business.
Sharma owns 51% in the payments bank, which can take deposits of up to 200,000 rupees ($2,412) but isn’t allowed to lend. One97 Communications owns the remaining stake.
The Reserve Bank of India on Jan. 31 ordered Paytm Payments Bank to stop its popular mobile wallet business and barred it from taking deposits or allowing top-ups after Feb. 29. The banking regulator is considering scrapping the bank’s license as early as March.
Among options the company is now considering is a sale of the wallet business, the Hindu Business Line reported, citing people it didn’t name. Jio Financial Services Ltd., is among forerunners to buy it, the newspaper said, helping to propel the shares of the Mukesh Ambani-controlled fintech firm by as much as 17%.
Paytm Payments Bank declined to comment on the report, saying “we completely abide by the direction of the regulator, and the team’s effort is to ensure a smooth customer experience with the products offered by PPBL.” A representative for Reliance Industries Ltd. from which Jio Financial was spun off, did not offer any immediate comment.
SoftBank Group Corp.-backed Paytm has been in the cross-hairs of the regulator for some time, with multiple warnings over the past two years about questionable dealings between its banking arm and its popular payments app.
In a response to the regulator’s latest salvo, Paytm last week said it will expand its relationships with third-party banks to expand its business and work toward profitability. It also addressed what it called “market rumors,” saying Sharma “has not taken any margin loans, or otherwise pledged any shares that are directly or indirectly owned by him.”
India’s banking regulator is weighing the removal of the permit after finding several lapses at Paytm Payments Bank including multiple transactions beyond regulatory limits, raising money-laundering concerns, Bloomberg News reported last week.The regulator has already ordered the bank to halt much of its business, potentially affecting the broader digital-payments pioneer’s prospects.
Paytm said the company and its founder Vijay Shekhar Sharma aren’t under investigation by the country’s anti-money laundering agency, although the statements did little to alleviate investor concerns. Paytm shares tumbled 10% Monday, the most allowed, pushing its declines over the past three trading days to more than 40%.
“In the past, certain merchants/users on our platforms have been subject to enquiries and on those occasions, we have always cooperated with the authorities,” Paytm parent One97 Communications Ltd. said in a disclosure to stock exchanges late Sunday. The company has also cooperated with state agencies on such probes, it added.
The unprofitable company’s market value has tumbled to about $3.4 billion — down about 80% from its stock market debut in late 2021. The Mumbai stock exchange over the weekend changed the daily move limit on Paytm shares to 10% after it plunged by 20% — the previous limit — on each Thursday and Friday.
India’s regulator stepping up its actions on Paytm’s relatively small banking arm is a blow to the broader firm’s reputation and means it needs to quickly find new partners to soften the impact to its core digital-payments business.
Sharma owns 51% in the payments bank, which can take deposits of up to 200,000 rupees ($2,412) but isn’t allowed to lend. One97 Communications owns the remaining stake.
The Reserve Bank of India on Jan. 31 ordered Paytm Payments Bank to stop its popular mobile wallet business and barred it from taking deposits or allowing top-ups after Feb. 29. The banking regulator is considering scrapping the bank’s license as early as March.
Among options the company is now considering is a sale of the wallet business, the Hindu Business Line reported, citing people it didn’t name. Jio Financial Services Ltd., is among forerunners to buy it, the newspaper said, helping to propel the shares of the Mukesh Ambani-controlled fintech firm by as much as 17%.
Paytm Payments Bank declined to comment on the report, saying “we completely abide by the direction of the regulator, and the team’s effort is to ensure a smooth customer experience with the products offered by PPBL.” A representative for Reliance Industries Ltd. from which Jio Financial was spun off, did not offer any immediate comment.
SoftBank Group Corp.-backed Paytm has been in the cross-hairs of the regulator for some time, with multiple warnings over the past two years about questionable dealings between its banking arm and its popular payments app.
In a response to the regulator’s latest salvo, Paytm last week said it will expand its relationships with third-party banks to expand its business and work toward profitability. It also addressed what it called “market rumors,” saying Sharma “has not taken any margin loans, or otherwise pledged any shares that are directly or indirectly owned by him.”
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