Paytm Shares Slip 5 Per Cent; Hit Lower Circuit Limit

Paytm stock plummeted by 4.99 per cent to Rs 406.15 on the BSE, reaching its lower circuit limit

The market turbulence coincides with the announcement of Vijay Shekhar Sharma stepping down as the part-time non-executive chairman of Paytm Payments Bank Limited.

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Shares of One97 Communications Ltd, the parent firm behind the Paytm brand, saw a sharp decline of 5 per cent on Wednesday morning's trading session, hitting a lower circuit limit. The stock plummeted by 4.99 per cent to Rs 406.15 on the BSE, reaching its lower circuit limit. A similar dip was observed on the NSE, where it fell by 4.99 per cent to touch the lower circuit limit of Rs 406.20.

This downward trend starkly contrasts with the recent bullish run, as shares of One97 Communications had consistently hit upper circuit limits on Tuesday, Monday, and Friday.

The market turbulence coincides with the announcement of Vijay Shekhar Sharma stepping down as the part-time non-executive chairman of Paytm Payments Bank Limited. This development was revealed through a filing on Monday, which also mentioned the reconstitution of the bank's board. The filing further disclosed the commencement of the process to appoint a new chairman for PPBL.

These sudden changes unfold against the backdrop of regulatory scrutiny faced by Paytm Payments Bank. The Reserve Bank of India (RBI) has recently intensified its crackdown on the bank due to persistent non-compliance and ongoing supervisory concerns.

In its regulatory actions last month, the central bank prohibited PPBL from accepting fresh deposits or top-ups in customer accounts, wallets, FASTags, and other instruments after February 29, with the deadline later extended to March 15.

Highlighting the ownership structure, One97 Communications Ltd (OCL) is identified as the owner of the Paytm brand, holding 49 per cent of the paid-up share capital of PPBL, directly and through its subsidiary. Notably, Vijay Shekhar Sharma retains a 51 per cent stake in the bank.

Meanwhile, the RBI last week announced that it has instructed the National Payments Corporation of India (NPCI) to explore the potential for serving as a third-party application provider to facilitate ongoing UPI operations for the Paytm app. This decision is intended to guarantee uninterrupted services for users of the Paytm app. The directive follows the RBI's restriction on Paytm Payments Bank, preventing it from receiving additional credits into customer accounts and wallets after March 15, 2024.