Paytm Shares Plunge for Third Consecutive Day, Market Valuation Dips by Rs 20,471 Crore
- ByStartupStory | February 5, 2024
In a tumultuous week for digital payment giant Paytm, its parent company, One97 Communications Ltd, witnessed a further 10% decline in its shares for the third consecutive day, reaching the lower circuit limit. This persistent sell-off by investors comes in response to regulatory measures imposed by the Reserve Bank of India (RBI).
The stock dropped by 10% to Rs 438.35 on the Bombay Stock Exchange (BSE), hitting the daily lower permissible limit. A similar fate befell the National Stock Exchange (NSE), with a 9.99% plunge, reaching the lower circuit limit of Rs 438.50.
Over the course of three days, Paytm shares have experienced a staggering 42% decline, wiping out a substantial Rs 20,471.25 crore from its market valuation. The RBI’s intervention has particularly targeted Paytm Payments Bank Ltd (PPBL), a subsidiary of One97 Communications Limited, directing it to suspend several key operations effective from February 29.
The central bank’s directives include the suspension of additional deposit acceptance, credit transactions, and top-ups for customer accounts, prepaid instruments, wallets, and cards used for road toll payments. However, customers will retain access to their existing deposits and can utilize stored funds in their wallets until the end of February. If the RBI maintains its decision, top-ups for Paytm wallets will cease, and transactions through them will be prohibited.
One97 Communications holds a 49% stake in the paid-up share capital of PPBL, both directly and through its subsidiary, while Paytm’s founder, Vijay Shekhar Sharma, owns a 51% stake in the bank. Despite the setback, Paytm management is engaging in discussions with the RBI to ensure compliance with the regulatory directives and continue business operations.
Addressing concerns, Sharma took to social media, reassuring users about the continuity of services. On X (formerly Twitter), he stated, “Your favourite app is working, will keep working beyond 29 February as usual.” He expressed gratitude for the unwavering support, asserting their commitment to serving the nation while navigating these challenges.
Paytm anticipates an impact of Rs 300-500 crore on its annual operational profit due to the regulatory measures. In the face of adversity, Sharma remains optimistic about India’s global recognition in payment innovation and financial inclusion, with Paytm positioned as a leading advocate for these advancements.
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