Amidst ongoing regulatory uncertainties, shares of Paytm, the fintech giant, fell by 3 per cent on Monday morning following media reports suggesting that the Reserve Bank of India (RBI) might cancel the banking license of Paytm Payments Bank Limited (PPBL). This development comes with less than two weeks remaining until the central bank's deadline, which is March 15, for the cessation of operations.
The shares of Paytm at 1:44 pm IST were trading at Rs 412.70, down by 0.41 per cent.
According to various media reports, there are indications that the RBI is contemplating a move to cancel the banking license of PPBL. Additionally, there are also speculations that the central bank might appoint an administrator to supervise the critical operations of PPBL.
In case, if the RBI go ahead with the such revocation of PPBL's license, it would signify the first time in more than twenty years that the banking regulator has undertaken such a consequential measure, marking a rare and unprecedented move in the financial sector, as per reports.
Paytm Crisis
In a regulatory move in January, the RBI prohibited PPBL from accepting new deposits or top-ups in various customer instruments, including accounts, wallets, and FASTags, effective February 29 and later on, the deadline was further extended to March 15.
Furthermore, in a sudden move on February 26, Vijay Shekhar Sharma resigned as the part-time non-executive Chairman of Paytm Payments Bank Limited, leading to a reconstitution of the bank's board.
Additionally, on March 1, the Financial Intelligence Unit of India (FIU-IND) levied a penalty of Rs 5.49 crore on Paytm Payments Bank Ltd. The penalty was imposed due to violations of money laundering laws. Notably, the order announcing the penalty was issued shortly before the board of the parent firm, One97 Communication, approved the discontinuation of various inter-company agreements with Paytm Payments Bank.
