Paytm hits New Loss as RBI Bars from Acquiring Customers

Shares in One97 Communications, the parent company of digital payment giant Paytm, fell 13% in a day-to-day transaction on Monday after the Reserve Bank of India (RBI) announced the suspension of Paytm-Payments Bank to a low of Rs 677 at BSE. Paytm Payments Banks immediately implement onboarding new customers due to certain regulatory concerns.

Stock prices have fallen from the previous low of Rs.728.50 set on March 8, 2022. Stock prices are currently down 69% from the issue price of Rs.2,150. The company made its market debut on November 18, 2021.

In addition, banking regulators have instructed Paytm PB to hire an IT auditing company to perform a comprehensive system audit of  IT systems. Paytm PB requires specific approval from  RBI to resume customer onboarding after an audit review.

Paytm has said that the PPBL is taking immediate steps to comply with RBI directions and was looking to appoint a reputed external auditor to conduct a comprehensive systems audit of its IT systems.

According to the company, RBI orders will not affect existing PPBL customers who can continue to use all banks and payment services without interruption. Users of all existing Paytm UPI, Paytm Wallet, Paytm FASTag, and bank accounts can continue to use these items, such as debit cards and online banking, for payments in exchange applications.

ICICI Securities believes that this embargo will have a negative impact on new wallet onboarding, savings/current accounts. The ban on customer acquisition will undermine Paytm PB's business growth, which aims to acquire 500 million customers. The brokerage firm also said in a statement that PPBL could delay plans to apply for conversion to a small finance bank.