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parcel of Paytm plunged 10 % on Monday , the third successive session of decay , bear on an all - time first of 438.35 Native American rupee ( or $ 5.28 ) afterthe RBI ’s clampdownlast week looks to have had a more extensive encroachment than antecedently call .
The trading was halted after Paytm ’s share fall 10 % , the unreal limit put on its daily business deal by the local exchange . Even as Paytm initially anticipated RBI ’s decision to have a maximal one-year shock of $ 60 million to its business , the financial service firm has shed about $ 2.5 billion in its market chapiter in three day , or more than 40 % of its value since Wednesday close . ( Paytm ’s food market hood on Monday stood at $ 3.35 billion , below the $ 3.4 billion valuation at which it lift capital letter from Ant Financial in 2015 and far below its IPO valuation of $ 20 billion . More on numbershere . )
The Reserve Bank of India ( RBI ) last week widened its curb on Paytm ’s Payments Bank , which action transactions for Paytm , bar it from offering many banking services , including accept fresh deposit and credit dealings across its service . In response , Paytm initially said it willterminate business with its affiliateand seek partnership with other banks .
However , decouple Paytm from its affiliated Paytm Payments Bank appears to father extra difficulties , both technical and perceptual .
TechCrunch first reported last hebdomad that the RBI is consideringcanceling Paytm ’s Payments Bank license . In early 2018 , when Paytm received the Payments Bank license — which allow the bearer to offer customers a preservation account of up to $ 2,400 — it had to give up its PPI licence , the Trachinotus falcatus need to function the wallet occupation .
Paytm Payments Bank domiciliate more than 330 million wallet customers and Paytm can not transition them to a dissimilar banking collaborator until the cardinal banking concern return the firm its PPI permission . And it ’s unclear if the primal bank — which has been uncharacteristicallystrong - worded in its penalty orderon Paytm — will make any concession by the deadline ( February 29 ) . Indian daily Hindu Businessline report on Sunday that Paytm istrying to deal the wallet line .
And that is not the only other license at stake . As Bengaluru - base fintech investorOsborne Saldanha adds :
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The obvious , direct impact is that Paytm ’s payment banking operation will be stop until RBI free further instructions . It is however unclear if RBI will let Paytm to ever resume payment banking operations even post compliance with RBI ’s essential as the notification does put forward any remedial clauses . It ’s entirely possible that RBI may scrub Paytm ’s defrayment banking permission completely . If that happens , bear with me as I ’m not able-bodied to conclusively decipher , but it seems Paytm might not even have a payment collector license , as the payment collector license would have domiciliate in the payment cant license and Paytm ’s program for a payment collector permit was returned by RBI .
In its presentment last week , the RBI said Paytm ’s “ persistent ” disobedience with an other society — from March 2022 , when the RBI consecrate Paytm to stop adding client to Payments Bank — raised supervisory concerns and warranted further actions . The RBI said an audit found the case of disobedience , but did n’t go into detail .
The local medium reported last week that Paytm Payments Bank was riddled with event such as money - laundering and that India ’s crime - contend way Enforcement Directorate was probing the firm . Paytmdeclined(PDF ) that the ED was lead any investigation , and in a townhall with employee on Saturday , Paytm ’s senior executives guarantee that the exit reported in spiritualist were “ old ” and had been furbish up “ long back , ” TechCrunchfirst describe .
As we set about to sympathise the full extent of the possible damage from the RBI ’s initial ruling to Paytm , the fellowship is already beginning to bleed customers and merchants . As Macquarie analyst Suresh Ganapathy pointed out on an analyst call last week , many Paytm client are already harbor the belief that Paytm is defunct .
“ We forestall this to dent Paytm ’s consumer brand credibility that could drive market share losses in segments Paytm prevail in the past , ” JPMorgan analysts said in a note last workweek .
The on-going installment with Paytm is also shaking the confidence of investor in the Indian fintech market . The RBI has introduced a series of regulatory changes — or clarifications — in the last three years and fintech as a sector was already becoming unfriendly for many VCs .
“ I consider this action against Paytm is case law - scope , rough and bear upon the broader fiscal services ecosystem in India . I do n’t call back the last fourth dimension RBI canceled the permission of a coin bank for reasons other than passable capital prerequisite , ” Saldanha added .
Bipin Singh , Colorado - founder of fiscal service firm MobiKwik , support the RBI ’s principle : “ Having act upon with the regulator closely over the last decade or so , I can say once and for all that RBI is neither against innovation nor against fintechs . If they were , we would n’t have the vast fintech ecosystem in India today . Compliance , however , is not on the table , ” hetweeted .
