New Delhi: Shares of Paytm dropped sharply on Monday, falling as much as 8.4 percent, their biggest intraday decline in over three months, after the Reserve Bank of India cancelled the banking licence of Paytm Payments Bank Limited. The stock later recovered some of the losses and was trading about 3.5 percent lower.
The RBI’s decision comes two years after it first imposed business restrictions on the payments bank over regulatory violations. At the time, the central bank had directed the lender to stop accepting fresh deposits, citing non-compliance in areas such as customer due diligence, utilisation of funds, and weaknesses in its technology infrastructure.
In its statement announcing the licence cancellation, the RBI said that allowing the bank to continue operations would not serve any useful purpose or public interest.
It also raised concerns about the overall management of the bank, stating that its conduct was prejudicial to the interests of depositors and the wider public.
Following the development, the board of One 97 Communications approved the winding up of the payments bank on April 25. The company clarified that the closure of Paytm Payments Bank and the termination of its associate relationship are not expected to have any material impact on its core business, operations, or financial condition.
Despite these assurances, analysts at BofA Securities cautioned that the move could heighten regulatory risks for Paytm. They noted that the company may face increased difficulty in obtaining future licences from the RBI, which could pose challenges for its long-term growth and expansion strategy.
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