A stock has crashed more than 60% from its recent high and the market is buzzing. Yes, you guessed it right, we are talking about PAYTM.
Effective February 29, Paytm Payments Bank will no longer be able to accept new users, and even the existing users will be unable to utilise Paytm wallets, Fastags, and mobility cards after this date. The ban extends to other banking services, such as the transfer of funds, UPI, and immediate payment services. However, withdrawals will be possible.
After that announcement, Paytm Payments Bank Limited (PPBL) is associated with One97 Communications Limited (OCL), faced a major blow recently as a result, its stock plummeted around 42% in just 3days!
Why paytm share price crashed? Why RBI banned paytm payments bank? What is the Future of Paytm Bank? Are the rumors going on in the market about Paytm true? Read our today’s blog to know in brief.
- In June 2018, an RBI audit prohibited Paytm Payments Bank to onboard new customers due to KYC process issues.
- Further, RBI had also imposed a penalty of Rs 1 crore in October 2021
- Rs 5 crore in October 2023 for misrepresentation and non-compliance with licensing guidelines and cyber security measures.
- In March 2022, the bank was again directed to cease on-boarding immediately due to continued non-compliance issues.
- In November 2023, RBI instructed banks and NBFCs to increase the risk weightage on consumer credit by 25 percentage points to 125%. As a result, Paytm had to halt its ‘buy now, pay later’ services and reduce its loan exposure below Rs 50,000.
- Paytm was already in the bad books of many investors due to its inconsistent cash flow and loss-making nature.
- While some recent Bullish Activity was also being observed in Paytm. According to NSE Data, Morgan Stanley Asis( Singapore) PTE bought 0.79% stake of Paytm at a price of Rs 487.20 in a Bulk Deal on 2nd February, 2024.
- Company’s Marketing and Financial Services Businesses are not affected due to RBI Directions.
- Work has started for some Operational Change required.
- We believe to be able to complete this in next few days/quarters through partnership with other Banks.
- It is not possible to know in advance what we can and cannot do, RBI has not yet sent us any details about the action.