Paytm Share Price Today: One97 Communications Slumps After RBI’s Banking Licence Cancellation

The regulator had cancelled its payments bank licence on April 24 for multiple governance issues, failure to conduct customer due diligence, KYC violations and for engaging in practices that were in the interest of depositors. The central bank has also started the liquidation of the banking arm through the High Court, revealing that the regulator doesn’t see any public interest in continuing with the business.

The move has again put Paytm in the stock market spotlight, with investors wondering if the fintech giant can retain investor trust after its series of regulatory issues.

What Caused Paytm Share Price To Crash Today?

Paytm’s recent share price drop is not only about the shutting down of one of its subsidiaries, but also about confidence, trust and the future of regulatory approvals.

Major reasons behind the decline:

• Paytm Payments Bank licence has been revoked by RBI
• RBI has started the court-led winding up process
• Market may anticipate more scrutiny on Paytm financial services
• Merchant and customer ecosystem trust may be dented in the short-term
• Overseas fund managers are taking stock in fintech shares

While the company said in its stock exchange filing that there is “no direct financial exposure” or business dependence on Paytm Payments Bank anymore, Dalal Street continues to be sceptical for the time being.

Analysts say the impact is more brand rather than bottom-line. In the digital financial services sector, regulatory favour usually serves as a growth driver and any extended discomfiture with the central bank can impede business plans.

Any Impact on Paytm’s Business?

Paytm has confirmed that its key consumer and merchant services are running as usual. This includes:

• UPI transactions
• QR code merchant payments
• Soundbox services
• Online payment gateway
• Card machines and settlement services

The firm claims it moved most of its banking-related business to partner banks following previous RBI curbs – this will help dampen the impact on the company’s business.

But market analysts note that a key question could be whether the company can continue to develop new credit, wallet and financial services distribution products as quickly as it has been doing without an internal banking partner.

What’s the Future of One97 Communications?

Opinions differ among brokerages for the short term.

Some are more cautious because:

• regulatory uncertainty may remain,
• new approvals may take longer,
• and investor sentiment might be jittery for quarters to come.

On the other hand, some international brokerage firms believe Paytm’s merchant payments network and loan distribution business has a bright future. For example, Bernstein has remained positive and reportedly expects upside if the company successfully stays away from the payments bank scandal.

Signs to look out for in the outlook:

• Management guidance on Q4 results
• Retention rates post RBI intervention
• RBI approvals for fintech products
• Ongoing revenue growth in loan distribution and payment gateways
• Institutional investor holding pattern

We expect volatility to continue in the short term. However, if Paytm can prove that its fintech-only platform is robust, then the shares may start to rebound from their current lows.

Bottom Line

The 8% fall in the share price of PAYTM today reflects a panic about its regulatory defences, rather than about the immediate failure of Paytm’s business. The ban on the banking partner has certainly been a fresh rebuff, but Paytm’s future now hinges on how effectively it can persuade merchants, users and investors that it has separated itself from the shaky banking partner.

Meanwhile, Paytm will continue to be one of the most closely tracked fintech stocks in the Indian payments and commerce scene.

Also Read: RBI Cancels Paytm Bank License: Impact on Customers