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Paytm Shares Plummet 20% as RBI Directs Paytm Payments Bank to Cease Deposits

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Shares of One97 Communications Ltd, the parent company of the widely-used Paytm brand, witnessed a staggering 20% decline on Thursday. The Reserve Bank of India (RBI) issued a directive instructing Paytm Payments Bank Ltd to halt the acceptance of deposits or top-ups in any customer accounts, wallets, FASTags, and other financial instruments after February 29.

The stock of One97 Communications Ltd plummeted to its lower circuit limit, reaching Rs 608.80 on the Bombay Stock Exchange, and experienced a 19.99% drop to hit the lowest trading permissible limit for the day, reaching Rs 609 on the National Stock Exchange. This drastic downturn resulted in the erosion of the company’s market capitalization by Rs 9,646.31 crore, settling at Rs 38,663.69 crore in early trade.

The central bank’s decision comes in the wake of persistent non-compliances and ongoing material supervisory concerns related to Paytm Payments Bank. In a statement, the RBI clarified that while interest, cashbacks, or refunds may be credited back to customers at any time, Paytm Payments Bank Ltd must cease operations related to customer accounts, wallets, and FASTags from the end of February.

Additionally, the RBI mandated the termination of the nodal accounts of both One97 Communications Ltd and Paytm Payments Services, emphasizing that this action should be completed no later than February 29, 2024.

One97 Communications Ltd, while holding a substantial 49% stake in Paytm Payments Bank Ltd, categorizes it as an associate rather than a subsidiary. As a consequence of the RBI’s order, the company anticipates an adverse impact of Rs 300 crore to Rs 500 crore on its annual operational profit.

In response to the development, Paytm issued a regulatory filing stating, “Depending on the nature of the resolution, the company expects this action to have a worst-case impact of Rs 300-500 crore on its annual EBITDA going forward. However, the company expects to continue on its trajectory to improve its profitability.”

Investors and stakeholders are now closely monitoring the unfolding situation as Paytm grapples with the repercussions of the RBI’s directive, with uncertainties surrounding the future trajectory of one of India’s leading digital payment platforms.