Share price of Paytm's parent company, One 97 Communications Ltd, slumped by around 13 percent to hit an all-time low on Monday after the Reserve Bank of India (RBI) barred Paytm Payments Bank from onboarding new customers.
At the BSE, One 97 Communications Ltd share closed 12.84 percent down at Rs 675.35. The scrip slipped to a low of Rs 662.25 in the intra-day. This is the lowest ever price of One 97 Communications Ltd.
The share price of One 97 Communications Ltd tumbled after the RBI imposed restrictions on Paytm Payments Bank and asked it to appoint an IT audit firm to conduct a comprehensive system audit of its IT system.
"Reserve Bank of India has today, in the exercise of its powers, inter alia, under section 35A of the Banking Regulation Act, 1949, directed Paytm Payments Bank Ltd to stop, with immediate effect, onboarding of new customers," the RBI had said on Friday.
"The bank has also been directed to appoint an IT audit firm to conduct a comprehensive System Audit of its IT system. Onboarding of new customers by Paytm Payments Bank Ltd will be subject to specific permission to be granted by RBI after reviewing report of the IT auditors," RBI said.
In its reply to the RBI's action, One 97 Communications Ltd said, "The bank (Paytm Payments Bank) is taking immediate steps to comply with RBI directions, including the appointment of a reputed external auditor to conduct a comprehensive System Audit of its IT systems. PPBL remains committed to working with the regulator to address their concerns as quickly as possible."
"The Company has been informed that this does not impact any existing customers of PPBL, who can continue to use all banking and payment services without interruption. All existing users of Paytm UPI, Paytm Wallet, Paytm FASTag, and bank accounts can continue to use these instruments, including debit cards and net banking, for payments," Paytm's parent firm said.
Santosh Meena, Head of Research, Swastika Investmart Ltd.
Paytm is continuing its southward journey and there is no end to the tough time for the investors of the company. There is a serious allegation of data leaks to Chinese firms whereas RBI also barred Paytm bank from adding new customers. Unrealistic valuations at the time of IPO was a key concern initially, but then we didn't see any positive trigger that could have helped the stock to recover. We don't have clarity of the business model and timing of profitability while there are regulatory headwinds. Therefore, new investors should avoid this stock despite a sharp fall in the price. Existing investors may also look for exit opportunities. However, things can become better only if the company manages to come out of regulatory issues successfully and witness any signs of profitability.
(With ANI inputs)