Paytm Erases $2 Billion In Market Value In 2 Days, Shares Plunge Another 20 Per Cent

Paytm's market capitalisation (Mcap) eroded by Rs 17,378.41 crore to Rs 30,931.59 crore in two days

Shares of One97 Communications Ltd, the parent firm of Paytm, plunged another 20 per cent on Friday as the Reserve Bank of India (RBI) on Wednesday in a directive asked Paytm Payments Bank Ltd (PPBL) to stop accepting deposits or top-ups in any customer accounts, wallets, FASTags, and other instruments after February 29. One97 Communications holds a 49 per cent stake in PPBL, but classifies it as an associate of the company and not as a subsidiary. 

Following this development, One97 Communications Ltd has lost $2 billion in market value in just two days. According to Bloomberg, Paytm, which counts Alibaba’s Antfin Singapore Holding Pte. and SoftBank Group Corp. among its investors, is now down nearly 77 per cent from its initial public offering (IPO) in 2021. The market capitalisation (Mcap) eroded by Rs 17,378.41 crore to Rs 30,931.59 crore in two days.

Paytm stock tanked 20 per cent to Rs 487.05, its lowest trading permissible limit for the day, at the BSE. On the NSE, it plunged 20 per cent to hit the lower circuit limit of Rs 487.20. One97 Communications' shares tanked 20 per cent on Thursday as well.

The fintech firm also saw an impact of Rs 300-500 crore on its annual operational profit, as its customers will not be able to add money to their wallets, FASTags etc as the central barred Paytm Payments Bank Ltd from accepting deposits or top-ups in any customer account. The RBI has also restricted Paytm's prepaid instruments, wallets, and FASTags, among others after February 29, 2024. Until then, customers can add money as well as withdraw money from the Paytm wallet and PPBL account.

As per the RBI release, the regulator said withdrawal or utilisation of balances by Paytm's customers from their accounts, including savings bank accounts, current accounts, prepaid instruments, FASTags, National Common Mobility Cards, etc. are to be permitted without any restrictions, upto their available balance. No other banking services, other than those referred in (ii) above, like fund transfers (irrespective of name and nature of services like AEPS, IMPS, etc.), BBPOU and UPI facility should be provided by the bank after February 29, 2024. The RBI said the action against PPBL followed a comprehensive system audit report and subsequent compliance validation report of external auditors.