Why Paytm Shares Plunged To Record Low On Monday

Shares of One97 Communications, the parent of financial technology firm Paytm, plunged as much as 13.25 per cent to hit record low of Rs 672

Outlook Business Team

Updated on: 14 March 2022 10:52 am

Paytm shares hit record low on Monday.

Shares of One97 Communications, the parent of financial technology firm Paytm, plunged as much as 13.25 per cent to hit record low of Rs 672 after the Reserve Bank of India directed the Paytm Payments Bank to stop onboarding of new customers and directed the firm 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," Reserve Bank of India said in a press release.

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.

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Paytm Payments Bank (PBBL) was incorporated in August 2016 and formally began its operations in May 2017 from a branch in Noida. As per the last disclosed numbers, PPBL had around 6.4 crore customers.

The RBI had in June 2018 too prohibited PPBL from onboarding new customers on account of supervisory concerns. The restrictions were lifted on December 31, 2018.

The central bank had also issued a show cause notice to the firm dated July 29, 2021, stating that Paytm Payments Bank had committed an offence under the Payment and Settlement Systems Act, 2007 by submitting false information to RBI confirming completion of the transfer of Bharat Bill Payment Operating Unit business by One97 Communications to PPBL.

Meanwhile, Paytm Payments Bank on Saturday said it is taking immediate actions to comply with the direction of the Reserve Bank of India which has barred the company from opening new accounts amid "material supervisory concerns".

In a separate incident, Paytm CEO Vijay Shekhar Sharma was arrested by the Delhi Police for allegedly ramming into a senior police official's car in February and later was released on bail, a senior official confirmed the incident on Sunday.

"The accused rammed the car of south Delhi Deputy Commissioner of Police (DCP), Benita Mary Jaiker. However, the DCP was not present inside the car at the time of the incident," the official said.

As of 9:55 am, Paytm shares traded 11.78 per cent lower at Rs 683.50, underperforming the Sensex which was up 0.3 per cent.