Paytm shares fall after India imposes restrictions on joint venture banking

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Shares of Paytm fell 13% after the Reserve Bank of India banned the digital payments company Paytm Payments Bank from accepting new customers.

The action is based on certain “material oversight concerns” and the restrictions will continue pending a full audit of its IT systems, India’s central bank said on Friday.

Paytm Payments Bank is a joint venture between One 97 Communications, commonly referred to as Paytm, and the company’s founder, Vijay Shekhar Sharma.

The company is taking steps to comply with the central bank directive, including appointing an external auditor, it said on Saturday. Existing customers will not be affected.

The stock traded down 11% at 686 rupees ($9) as of 7:50 a.m. UAE time, after earlier dropping to 675 rupees.

Paytm Payments Bank started operations in November 2017 after receiving its license in 2015.

Mr. Sharma leads the bank’s strategy and vision, according to its website, and has played a vital role in the evolution of mobile payments in India.

Separately, Morgan Stanley analyst Sumeet Kariwala downgraded the recommendation on One 97 Communications to “equal weight” from “overweight.” It has a price target at 935 rupees.

Updated: March 14, 2022, 06:06

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