Paytm shares tank over 13% after RBI asks payments bank to stop opening new accounts

AgenciesUpdated: Monday, March 14, 2022, 01:55 PM IST
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The stock tanked 13.25 percent to Rs 672.10 -- the lowest since its listing -- on the BSE. | File pic

Shares of One 97 Communications Ltd, the parent firm of Paytm, on Monday tumbled over 13 percent after the RBI asked Vijay Shekhar Sharma-promoted Paytm Payments Bank to stop opening new accounts amid ''material supervisory concerns'' observed in the bank.

The stock tanked 13.25 percent to Rs 672.10 -- the lowest since its listing -- on the BSE.

At the NSE, it tumbled 13.29 percent to Rs 672.

At 1.52 PM, on the NSE, the stock was down 10.06 percent or Rs 78 at Rs 697.05

This is the third time that Paytm Payments Bank is facing action from the banking regulator since its inception in May 2017. It has been prohibited from opening new accounts for the second time.

''Reserve Bank of India has today, in 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 central bank said in a statement.

Sharma holds a 51 per cent stake in Paytm Payments Bank (PPBL), while the remaining 49 per cent is held by Paytm.

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 reports of the IT auditors. This action is based on certain material supervisory concerns observed in the bank,'' it said.

Paytm Payment Bank beings operations in 2017

Paytm Payments Bank was incorporated in August 2016 and formally began its operations in May 2017 in Noida.

Billionaire Vijay Shekhar Sharma, founder of payments firm Paytm, owns 51 per cent of Paytm Payments Bank. The move comes months after One97 Communications, the payments bank's parent, saw a dramatically underwhelming listing amid concerns around the company's valuation.

Paytm Bank had 64 million savings accounts as of March 31, 2021, and over Rs 5,200 crore in deposits. It was also the largest Unified Payments Interface beneficiary bank, with the lowest technical decline rate among beneficiary and remitter banks.

In December 2020, the RBI had barred HDFC Bank from launching any new digital products or services and issuing new credit cards till the lender resolved recurring tech issues.

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