Mumbai, February 1: The RBI curtailed Paytm Payment Bank services over the company's non-compliance and continued material supervisory concerns. Following the action taken by the central bank, the share prices of Paytm have crashed by 19.9% (nearly 20%) today. The Paytm share price today, on February 1, stood at Rs 609 lower circuit at 3:30 PM IST.
The Reserve Bank of India limited the Paytm Payment Bank services with restrictions on fund transfers, accepting deposits, wallets, FASTags, NCMC cards and more. Paytm announced that the users could use the existing balance on the mentioned services; however, the nodal accounts linked to One97 Communications and Paytm Payment Services will be terminated on February 29, 2024. Payments Bank Services Have Been Curtailed by RBI Over ‘Persistent Non-Compliances and Continued Material Supervisory Concerns’: Report.
Any account nodal accounts or pending transactions linked to initiated by the on the date or termination or early will be settled by March 15, 2024. Until further notice from RBI, the customers should be aware of the new restrictions imposed due to continuous non-compliance by the fintech company. According to the report by The Economic Times, the global investment banking and capital markets firm Jefferies was the first to "downgrade Paytm stock" with a target price as low as Rs 500.
The Jefferies analyst Jayant Kharote reportedly said that the RBI's actions directly impact the "wallet businesses" and "profitability of merchant payment business", which, in turn, can affect the EBITDA by 20% to 30%. He added that the business impact would primarily come to Paytm from "reputational concerns" arising from governance/compliance. He suggested that the path to resolution will be "strong compliance" with the RBI's regulations. Following Jefferies's reduction price target from Rs 500 to 1050, Motilal Oswal also downgraded Paytm's rating to neutral with a reduced target price of Rs 575. Elon Musk Announces To Shift Tesla’s Incorporation From Delaware to Texas After USD 56 Billion Pay Package Snub.
The report mentioned that the RBI's action on Paytm is expected to have a "worst-case impact" of Rs 300 to 500 crore on its annual EBITA. Amid the ongoing market rumours, the founder also reportedly re-confirmed that he had not taken any margin loans or pledged shares directly or indirectly owned by him.
(The above story first appeared on LatestLY on Feb 01, 2024 05:15 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).