Paytm Tanks 8% as RBI Revokes Payments Bank Licence; Shares Still Up 25% Over Last Year

Mumbai, April 27: Shares of One97 Communications, which operates digital payments platform Paytm, slumped sharply in early trade on Monday after the Reserve Bank of India (RBI) cancelled the banking licence of Paytm Payments Bank, triggering fresh concerns over regulatory overhang.

The stock bled as much as eight percent showing its steepest fall in over three months with the RBI saying it would start wind-up proceedings and citing constant compliance issues and governance concerns at the banking unit.

At the time of writing, the stock had managed to pare losses at Rs 1,108.80, down over three percent. Source: NSE

Regulatory Action

The central bank’s move comes after years of scrutiny. The RBI had earlier imposed restrictions on the payments bank over issues related to customer due diligence, fund flows and technology systems, before finally pulling the plug on its licence.

The sharp sell-off reflects investor anxiety over the broader implications of the move, even though the payments bank itself contributes a limited portion to the group’s consolidated financials. Market participants remain wary of potential disruptions to Paytm’s ecosystem, including wallet, FASTag and merchant payment services that were historically linked to the bank.

No Impact

However, the company has sought to reassure stakeholders, stating that the RBI’s action will have no material impact on its core business operations, with services continuing through partnerships with other banks.

Despite the immediate hit to sentiment, some brokerages have retained a constructive stance on the stock, arguing that the long-term story around Paytm’s core payments and financial services platform remains intact. Analysts point out that the company has already been transitioning key operations away from the payments bank following earlier regulatory curbs.

Regulatory Risks

Still, the latest development underscores the persistent regulatory risks surrounding the fintech major. The RBI’s decision to cancel the licence — rather than impose incremental restrictions — signals a tougher stance on compliance failures, which could keep the stock under pressure in the near term.

Interestingly, even after Monday’s slide, Paytm shares remain up over 25% over the past year, indicating that investors had partly priced in regulatory challenges and were betting on a turnaround in its core business.

Going ahead, the focus will shift to execution — particularly how smoothly Paytm migrates its banking-linked services and sustains growth in its lending, merchant payments and financial distribution businesses. For now, though, the market reaction suggests that regulatory shocks still carry the power to rattle investor confidence, even in a maturing fintech story.

Source:

•  https://www.nseindia.com/get-quote/equity/PAYTM/One-97-Communications-Limited