MARKET OVERVIEW :
Currency Market Overview February 7, 2024
RBI tightens its noose on FinTech Companies- PayTm share prices impacted;
Paytm share price gains for 2nd straight session jumps 10% after Vijay Shekhar Sharma meets with FM
From a High of Rs 1000 to a low of Rs 395..Now at Rs.496/per share- 10 % up today.
Paytm parent company One97 Communication’s share price rose 10 percent, rising for 2nd straight session, amid reports that the firm’s founder Vijay Shekhar Sharma met FM Nirmala Sitharaman to discuss the RBI’s restrictions.
Paytm parent company One97 Communication’s share price rose 10 percent, rising for 2nd straight session, amid reports that the firm’s founder Vijay Shekhar Sharma met FM Nirmala Sitharaman to discuss the RBI’s restrictions.
Paytm parent company One97 Communication’s share price rose 10 percent, providing relief to the investors, amid reports that the fintech firm’s founder Vijay Shekhar Sharma met Finance Minister Nirmala Sitharaman to discuss the Reserve Bank of India’s (RBI) restrictions.
RBI has instructed Paytm Payments bank to halt new deposits and credit transactions starting from February 29 due to regulatory concerns and non-compliance issues. Following this directive, Vijay Shekhar Sharma, the founder of Paytm, reportedly met the Finance Minister, the day after discussing a plan with RBI to address these regulatory issues.
Despite Sharma’s efforts, reports suggest that the central bank declined to offer any concessions to Paytm Payments bank, such as allowing the migration of accounts to other banks or extending the February 29 deadline. The stock rose as much as 10 percent to its intraday high of ₹496.75, extending gains for the second straight session. It ended over 3 percent higher in the previous session (February 6).
The central bank’s refusal poses a significant setback for Paytm, requiring the migration of Payments Bank accounts to third-party banks well in advance of the deadline to maintain smooth operations of the payments interface. This move necessitates swift action from Paytm to ensure a seamless transition for its customers and maintain functionality.
However, in the 3 previous sessions before that (between Feb 1 and 5), the stock crashed over 42 percent, hitting lower circuits in each of these sessions.
The stock is 77 percent down from its IPO price of ₹2,150 and over 50 percent away from its 52-week high of ₹998.30, hit on October 20, 2023. In February till date, the stock has lost almost 36 percent after a 20 percent rise in January. Meanwhile, in the last 1 year, the stock has declined 19 percent.
Meanwhile, Paytm also found itself under scrutiny when rumors emerged suggesting that the company, along with its associated firm and CEO/founder, were under investigation by government agencies for potential breaches of foreign exchange regulations and money laundering.In response, Paytm vehemently denied these allegations, labeling them as baseless speculations. The company clarified that reports indicating investigations into the violation of foreign exchange rules by Paytm or its associated entity, Paytm Payments Bank Limited (PPBL), had no factual basis. Furthermore, Paytm had previously refuted claims of any investigation by the Enforcement Directorate regarding OCL (One97 Communications Limited), its associates, or its management.
While the RBI put severe restrictions on Paytm Payment bank operations, citing non-compliance with KYC guidelines and other issues; Paytm has informed that the RBI curbs would not impact user deposits in their Wallets, FASTags, NCMC accounts and savings accounts.