Paytm's lending arm faces heightened tensions. Here is a timeline of events surrounding Paytm Payments Bank Ltd. that have unfolded so far
Paytm has been witnessing heightened tension since the RBI issued a notice to the fintech firm. The company's share prices have nosedived to record levels, erasing nearly Rs 20,500 crore of investors' wealth. The digital lending firm has been dominating headlines every single day. Here is a timeline of what has unfolded with Paytm's lending arm Paytm Payments Banking Ltd. so far.
1. RBI Imposed Operational Restrictions: On January 31st, the Reserve Bank of India (RBI) imposed operational restrictions on Paytm Payments Bank Ltd. (PPBL) due to persistent non-compliance issues and continued material supervisory concerns.
2. Stock Price Plummeted: Following RBI's action, PPBL's parent company, One97 Communications Ltd. (OCL), experienced a sharp downtrend in its share price, plummeting 20 per cent on both NSE and BSE.
3. Vijay Shekhar Sharma Promised Recovery: Vijay Shekhar Sharma, founder and CEO of Paytm, issued a statement reassuring that Paytm would continue its operations despite the regulatory issues. He said that the company aimed to reduce dependency on its associated bank by accelerating partnerships with other banks. However, the cautionary statement was not taken well by the market as the shares plunged another 20 per cent.
4. One 97 Communications Ltd. Responded to Speculation: OCL released a statement addressing speculative reports surrounding the reasons for RBI's action on Paytm Payments Bank. The fintech firm urged people to not pay attention to unofficial sources amidst rumors of license cancellations and investigations by the Enforcement Directorate (ED).
"There are other stories in various media, including social media, which are spreading speculation and misinformation on the reasons for RBI's action on Paytm Payments Bank. The recent direction from RBI is a part of the ongoing supervisory engagement and compliance process," the company stated in an exchange filing.
5. Concerns of Layoffs Surfaced: Reports emerged suggesting concerns among OCL employees regarding potential layoffs amidst regulatory scrutiny.
6. Assurance Against Layoffs: Shekhar reassured all Paytm staff that there would be no layoffs. The company was in discussions with RBI and considering partnership options with other banks to address regulatory concerns.
7. Further Stock Price Decline: OCL's stock prices continued to decline, totaling nearly a 43 per cent decrease and wiping out approximately Rs 20,500 crore from its market valuation.
8. Reports of Prospective Acquisition: Speculation arose regarding the potential acquisition of Paytm's wallet business by Jio Financial Services Ltd. (JFSL). However, both Paytm and JFSL refuted these reports, labeling them as speculative.
9. Minor Stock Price Surge: After consecutive declines, shares of Paytm witnessed a minor surge of 5 per cent. According to a report by Reuters, Vijay Shekhar Sharma and other Paytm officials met with RBI to discuss a roadmap addressing the regulatory concerns flagged by the central bank.