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Why have Paytm share prices crashed?

Why is Paytm’s share price falling?

The latest tumble in the company’s share price is on account of a ban by the Reserve Bank of India (RBI) on Paytm Payments Bank from onboarding any new customers.

RBI said in a statement Friday that it had taken the action on the basis of certain “material supervisory concerns”, but did not detail the concerns.

What is the way forward for Paytm Payments Bank?

The RBI has also directed the payments bank to appoint an IT audit firm to conduct a comprehensive System Audit of its IT system.

“Onboarding of new customers by Paytm Payments Bank Ltd will be subject to specific permission to be granted by RBI after reviewing report of the IT auditors,” the RBI noted.

In its statement, Paytm Payments Bank said that it was working with the banking regulator to get the concerns addressed.

“We shall notify when we recommence the opening of new accounts after obtaining RBI approval.We shall notify when we recommence the opening of new accounts after obtaining RBI approval,” it said.

Where does Paytm’s share price stand now?

Since its listing on November 18, Paytm’s shares are down over 70% from the issue price of Rs 2,150 apiece. 

Through the initial public offering at the issue price, the company had sought a valuation of Rs 1.39 lakh crore, and as of early Monday its market capitalisation stood at Rs 44,423 crore.

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