Paytm share price today: Shares of One97 Communications, parent company of fintech platform Paytm, fell as much as 8 per cent on Monday, hitting an intraday low of Rs 1,057 on the National Stock Exchange. The sharp decline came after the Reserve Bank of India canceled the banking license of Paytm Payments Bank, forcing the company to announce the closure of its banking subsidiary.In a stock exchange filing released after market close on Friday, Paytm said that RBI has effectively withdrawn the license of Paytm Payments Bank. The company stressed that it has no operational or financial exposure to the associate entity and does not provide any services jointly with it. It also clarified that Paytm Payments Bank has operated as an independent entity.Paytm said there will be no direct financial impact on One97 Communications, given that its investment in Paytm Payments Bank was already fully impaired by March 31, 2024.The company also tried to reassure users and investors that all Paytm services will continue without any disruption. These include offerings provided through Paytm App, Paytm UPI, Paytm Gold and its subsidiaries and associates such as Paytm QR, Paytm Soundbox, Paytm Card Machine, Paytm Payment Gateway and Paytm Money.
Why did RBI cancel the license of Paytm Payments Bank?
The RBI decision comes after more than two years of regulatory scrutiny and operational restrictions, including a ban on accepting new deposits in 2024. Paytm Payments Bank received its payments bank license in August 2015, allowing it to accept limited deposits, but not loans.The central bank said that the operation of the bank has become detrimental to depositors and contrary to public interest. It cited compliance shortcomings, including shortcomings in customer due diligence, governance concerns and issues related to management conduct. According to the RBI, allowing the bank to continue operating would serve neither public interest nor any useful purpose, an ET report said.Subsequently, on Saturday Paytm announced that the board and shareholders of Paytm Payments Bank have approved the necessary resolutions to initiate the winding up process.The company reiterated that the closure of Paytm Payments Bank and termination of its associate relationships is not expected to have any impact on the business operations, financial condition or overall performance of One 97 Communications. It added that all of its businesses will continue to operate independently and in full compliance with applicable laws and regulations.
paytm share price:What is Outlook?
The Reserve Bank of India’s decision to cancel Paytm Payments Bank’s banking license is likely to have little negative impact on its parent, One97 Communications, according to Bernstein quoted in the ET report. The brokerage said the language used by the regulator in its communication was quite strong and raised concerns.Despite this, the Societe Generale Group-backed brokerage has maintained its ‘outperform’ rating on Paytm with a target price of Rs 1,500. This suggests an upside potential of about 31 per cent for the stock from its previous closing level.Bernstein said that although Paytm holds a 49 percent stake in Paytm Payments Bank, it has no role in the bank’s current management or board. Still, the firm said the regulator’s strongly worded comments cannot be ignored, especially given the company’s history of regulatory challenges.The brokerage also said that after the RBI imposed restrictions on Paytm Payments Bank in early 2024, the company took adequate steps to break the operational ties between the bank and its core business. These measures included reconstituting the bank’s board and efforts to prepare the entity for a possible revival.Bernstein does not expect any immediate impact on Paytm’s ongoing business operations or financial performance. It highlighted that the operations of Paytm Payments Bank have been effectively suspended for over a year, and a clear separation between the bank and the parent company has already been established following the regulatory action.The brokerage further believes that this development could pave the way for Paytm to obtain an NBFC or prepaid payment instrument license. Securing such approval could allow the company to expand its offerings in areas such as digital wallets and certain credit products.Meanwhile, Goldman Sachs has reaffirmed its ‘Buy’ recommendation on Paytm, while reducing its target price to Rs 1,400 per share from Rs 1,470 earlier. Even at the revised level, the target indicates a potential upside of about 31 per cent from the stock’s previous closing price.The global brokerage views the Reserve Bank of India’s decision to cancel the banking license of Paytm’s subsidiary as a marginal negative development. However, he believes the move will not have any direct financial impact on the company.According to the brokerage, the primary concern is the possibility that this development could impact the sentiments of clients and traders.Goldman Sachs said that while the issue could weigh on the stock in the near term, Paytm’s underlying business fundamentals and operating momentum remain strong.(Disclaimer: The recommendations and views given by experts on the stock market, other asset classes or personal finance management are their own. These opinions do not represent the views of The Times of India)