Chief of India stock exchangesBombay Stock Exchange (BSE) and National Stock Exchange (NSE), has halved the daily trading limit for shares of digital payments giant Paytm. Effective from Monday, the new limit has been set at 10%, down from 20% earlier. The decision marks a staggering $2 billion decline PaytmThe assessment was triggered by an intense regulatory scrutiny of the company’s banking arm.
regulatory action
The Reserve Bank of India (RBI) has tightened restrictions on the banking operations of Paytm. Earlier this week, the central bank directed Paytm’s banking arm to stop accepting fresh funds into customer accounts from March and halt new top-ups on the popular wallet. The outcome of this directive is significant, as Paytm’s operations are intricately linked to its banking sector.
market turmoil
After a volatile week on the Mumbai Stock Exchange, Paytm’s market cap dropped to just $3.7 billion, a massive decline of $2 billion. Shares fell steadily, reaching 20% daily limits on Thursday and Friday.
Following the RBI directions, shares of Paytm’s parent company One97 Communications Ltd fell 40% in two days. The stock hit the minimum permissible limit of Rs 487.05 on BSE on Friday, reducing the market capitalization of the company by Rs 17,378.41 crore to Rs 30,931.59 crore.
underlying issues
The RBI ban on Paytm Bank is due to serious concerns over money laundering and KYC non-compliance. The allegations reveal that suspicious transactions involving large sums of money have taken place between Paytm and its banking subsidiary. As a result, RBI has ordered Paytm Payments Bank Limited (PPBL) to suspend key operations including customer deposits, credit transactions and wallet top-ups after February 29.
customer impact
Paytm customers can utilize existing deposits and wallet funds till the stipulated date. After February 29, unless the RBI stance softens, wallet top-ups and related transactions will stop.
KYC default
PPBL is accused of maintaining multiple non-KYC compliant accounts and allowing use of a single PAN for multiple accounts. Transactions that exceed regulatory limits indicate potential money laundering activities. Of the approximately 35 crore e-wallets under Paytm Payments Bank, most, about 31 crore, are inactive, raising suspicions of misuse.
As regulatory pressure increases, the future of Paytm’s banking operations hangs in the balance, with far-reaching implications for its market standing and customer base.
(with inputs from agencies)
regulatory action
The Reserve Bank of India (RBI) has tightened restrictions on the banking operations of Paytm. Earlier this week, the central bank directed Paytm’s banking arm to stop accepting fresh funds into customer accounts from March and halt new top-ups on the popular wallet. The outcome of this directive is significant, as Paytm’s operations are intricately linked to its banking sector.
market turmoil
After a volatile week on the Mumbai Stock Exchange, Paytm’s market cap dropped to just $3.7 billion, a massive decline of $2 billion. Shares fell steadily, reaching 20% daily limits on Thursday and Friday.
Following the RBI directions, shares of Paytm’s parent company One97 Communications Ltd fell 40% in two days. The stock hit the minimum permissible limit of Rs 487.05 on BSE on Friday, reducing the market capitalization of the company by Rs 17,378.41 crore to Rs 30,931.59 crore.
underlying issues
The RBI ban on Paytm Bank is due to serious concerns over money laundering and KYC non-compliance. The allegations reveal that suspicious transactions involving large sums of money have taken place between Paytm and its banking subsidiary. As a result, RBI has ordered Paytm Payments Bank Limited (PPBL) to suspend key operations including customer deposits, credit transactions and wallet top-ups after February 29.
customer impact
Paytm customers can utilize existing deposits and wallet funds till the stipulated date. After February 29, unless the RBI stance softens, wallet top-ups and related transactions will stop.
KYC default
PPBL is accused of maintaining multiple non-KYC compliant accounts and allowing use of a single PAN for multiple accounts. Transactions that exceed regulatory limits indicate potential money laundering activities. Of the approximately 35 crore e-wallets under Paytm Payments Bank, most, about 31 crore, are inactive, raising suspicions of misuse.
As regulatory pressure increases, the future of Paytm’s banking operations hangs in the balance, with far-reaching implications for its market standing and customer base.
(with inputs from agencies)
