In the aftermath of a $2 billion rout, the daily trading limits for fintech company Paytm have been cut down from 20% to 10% by the stock exchanges.
What Happened: The new 10% limits will be effective from Monday, as declared by the Bombay Stock Exchange and the National Stock Exchange on their websites, Reuters first reported.
This move follows a regulatory crackdown on Paytm’s banking unit by the Reserve Bank of India (RBI). The Paytm Payments Bank has been directed to stop accepting fresh deposits in its accounts or popular wallets from March.
Paytm, the country’s top digital payments app, which heavily depends on its banking unit, has been significantly impacted by this directive. The company’s market value plunged to $3.7 billion after losing $2 billion on the bourses this week.
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Why It Matters: The RBI had imposed severe operational restrictions on Paytm Payments Bank from Feb. 29, following continuous non-compliance issues and serious supervisory concerns. This included a ban on accepting new deposits and conducting credit transactions.
Following the RBI’s restrictions, Paytm’s stock faced severe selling pressure for two consecutive days, hitting a 20% lower circuit on both Thursday and Friday. The company assured immediate compliance with the RBI’s directions, expecting a potential impact of ₹300 to 500 crores on its annual EBITDA.
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