Shares of Paytm, the “Indian version of Alipay”, tumbled as much as 13% on Monday after the RBI ordered its joint venture, Paytm Payments Bank, India’s largest digital bank, to be banned from accepting new customers.
The RBI announced the move last week, saying the move was based on certain “significant regulatory concerns” and the restrictions would remain in place pending a full audit of Paytm Payments Bank’s information technology systems.
Paytm Payments Bank is jointly owned by Paytm parent company One 97 Communications and its founder Vijay Shekhar Sharma. The bank was granted an operating license in 2015 and started operations in November 2017, and has grown into India’s largest digital bank.
In a statement on Saturday, the company said it was taking steps to comply with the RBI’s directive, including the appointment of an external auditor. Existing customers will not be affected.
In addition, Morgan Stanley analyst Sumeet Kariwala downgraded One 97 Communications’ stock from “overweight” (equivalent to buy) to “equal weight” (equivalent to hold) with a target price of Rs 935.