Paytm’s stock faced severe selling pressure for the second straight day, hitting a 20% lower circuit at ₹487.05 on Friday. This slump followed a similar decline the previous day after the Reserve Bank of India (RBI) imposed restrictions on Paytm Payments Bank (PPBL).
What Happened? On January 31, the RBI, citing findings from a system audit report and external auditors’ compliance validation, barred PPBL from accepting new deposits or top-ups in customer accounts, wallets, or FASTags after February 29, under section 35A of the Banking Regulation Act, 1949. Additionally, the RBI ordered the termination of Nodal Accounts of One97 Communications and Paytm Payments Services Ltd. by February 29, 2024.
In response, Paytm assured immediate compliance with the RBI’s directions, expecting a potential impact of ₹300 to 500 crores on its annual EBITDA. However, the company remains optimistic about its profitability path.
Following the RBI’s action, One97 Communications (OCL), Paytm’s parent company, announced a strategic shift in its banking partnerships. The company stated it would now solely collaborate with other banks, moving away from PPBL. This decision aligns with OCL’s ongoing efforts over the past two years to diversify its banking partnerships. The company is also in the process of transferring its nodal account to other major commercial banks.
OCL reassured that its marketing and financial services businesses remain unaffected by the recent developments with PPBL.
Price Action: One 97 Communications Ltd. shares were trading 20% lower at ₹487.20 on Friday morning.
Don't miss a beat on the share market. Get real-time updates on top stock movers and trading ideas on Benzinga India Telegram channel.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.