- Paytm founder Vijay Shekhar Sharma reassured its extensive user base of over 300 million.
- Sharma asserted, “Your favorite app is working and will keep working beyond February 29 as usual.”
- Despite this reassurance the stock plummeted from ₹761.4 on Wednesday afternoon to ₹609 as markets opened the next day, resulting in a loss of $1.2 billion in market value.
- PBBL, in response to customer concerns, assured that their money is “safe” and that the RBI directive does not impact existing balances.
- Paytm, announced it is taking “immediate steps” to comply with the RBI’s demands.
In a bid to allay concerns surrounding the operational status of the popular digital payment app, Paytm founder Vijay Shekhar Sharma reassured its extensive user base of over 300 million on Friday morning. Amid growing unease, Sharma asserted, “Your favorite app is working and will keep working beyond February 29 as usual.”
This assurance follows a pivotal announcement by the Reserve Bank of India (RBI) two days earlier, stating that Paytm Payments Bank Ltd (PBBL), the banking wing of the app, will no longer be able to accept deposits, provide credit services, or facilitate fund transfers starting from March 1. The central bank, which had directed PBBL in March 2022 to halt onboarding new customers, cited “persistent non-compliance” issues flagged by an external audit.
Sharma, expressing gratitude to Paytm users for their unwavering support, stated, “For every challenge, there is a solution, and we are sincerely committed to serving our nation in full compliance. India will continue winning global accolades in payment innovation and inclusion in financial services, with PaytmKaro as the biggest champion of it.”
Despite this reassurance, Paytm’s stock witnessed a substantial decline in response to the RBI directive. The stock plummeted from ₹761.4 on Wednesday afternoon to ₹609 as markets opened the next day, resulting in a loss of $1.2 billion in market value. The downward trend continued, with the stock falling further to ₹487.2 as markets opened the following morning. Analysts are now speculating that “for all practical purposes, the operations of Paytm Payments Bank” may have come to an end.
PBBL, in response to customer concerns, assured that their money is “safe” and that the RBI directive does not impact existing balances. The central bank clarified that existing customers could continue utilizing account balances, including savings and current accounts, “without restriction and to the available limit.” However, PBBL also acknowledged that customers would no longer be able to deposit money in their accounts or transfer funds to wallets linked to those accounts after February 29.
Paytm, in a statement on Thursday, announced it is taking “immediate steps” to comply with the RBI’s demands. However, it cautioned that the regulatory order could have an annual “worst-case impact” of nearly $60 million on earnings.
Launched in 2010, Paytm’s UPI platform quickly became synonymous with digital payments in India, a country traditionally dominated by cash transactions. Despite holding a 49% stake in PBBL, a separate but connected business, Paytm founder Vijay Shekhar Sharma, along with the company’s shares, has faced significant challenges since its listing on the Mumbai stock exchange in November 2021, with shares plummeting more than 70% amid concerns over profitability and regulatory issues.
(With inputs from agencies)
