Paytm share price falls by 13% days after RBI restriction: Report

Paytm’s share price sank by 13 per cent on Monday days after the Reserve Bank of India (RBI) stopped the Paytm Payments Bank from onboarding any new customers because of “material supervisory concerns” observed in the bank, According to news agency Reuters, Paytm’s shares were down 11.9% at 682.85 rupees, as of 0430 GMT (around 10 am IST), in a stronger Mumbai market, which was up about 0.4%.The central bank on Friday said: “Reserve Bank of India has today, in the exercise of its powers, inter alia, under section 35A of the Banking Regulation Act, 1949, directed Paytm Payments Bank Ltd to stop, with immediate effect, onboarding of new customers.” Paytm Payments Bank has been instructed to appoint an IT audit firm to conduct a comprehensive system audit of its IT system, the RBI further said.Also Read| RBI stops Paytm Payments Bank from onboarding new customersWith Monday’s losses, the company’s shares have declined by over 65 per cent since their debut.Analysts at ICICI Securities told Reuters on Monday that Paytm Payments Bank will have to increase its efforts to enhance engagement with the existing user base to offset any adverse impact of the embargo on new users. “Now, expecting moderation in the onboarding of new users and the adverse impact on incremental payment revenue… we revise our target price to ₹1,285 (earlier ₹1,352),” ICICI Securities said.On the other hand, analysts at Macquarie Research said that they expect a significant impact on Paytm’s brand and customer loyalty.Also Read| Paytm founder Vijay Shekhar Sharma held in Feb for hitting DCP’s car, got bailAnalysts also pointed out that the recent developments may defer or lower the chances of Paytm Payments Bank converting itself into a small finance bank licence.Previously, several reports had said that the bank approached the RBI for a small finance bank licence by June.(With Reuters inputs)