Paytm Lose ₹26,000 Crore In 10 Days After RBI’s Ban On Paytm Payments Bank

Paytm, a popular digital payment platform in India, has been facing significant challenges recently. The Reserve Bank of India (RBI) has banned Paytm Payments Bank from opening new customer accounts due to regulatory violations. 

Paytm Payments Bank is a subsidiary of Paytm. This has caused a loss of approximately Rs 26,000 crore in the company’s market value in just 10 days.

The drop in Paytm’s share price is mainly attributed to grocery or general stores, and small neighborhood shops, moving away from the company’s advertising campaign. 

Additionally, the RBI’s strict stance on Paytm Payments Bank has raised concerns about the company’s future. 

As a result, shares of Paytm’s parent company, One 97 Communications, have dropped by up to 9% on the Bombay Stock Exchange.

Global broking firm Macquarie has downgraded Paytm’s stock to ‘underperform’ and has revised its target price to as low as Rs 275. 

Macquarie believes that Paytm is currently fighting for survival and faces the risk of losing customers, which could impact its business model and monetization.

The RBI Governor, Shaktikanta Das, has expressed that there is limited scope for reviewing the actions taken against Paytm Payments Bank. 

This has led market experts to advise retail investors to be cautious and avoid investing in the company until the regulatory challenges are resolved.

Furthermore, lending partners of Paytm are reconsidering their relationship with the company, which could result in a decline in lending business revenues if partners choose to scale down or terminate their association with Paytm.

This week Paytm is facing significant challenges due to the RBI ban on Paytm Payments Bank and the loss of support from grocery or general stores. These challenges have led to a decline in the company’s market value and raised concerns about its future. 

Retail investors are advised to exercise caution when considering investing in Paytm until the regulatory issues are resolved.

Experts are expressing concerns about the future of Paytm. Anil Singhvi, the Managing Editor of Zee Business, stated that if he owned shares of Paytm, he would sell them after hearing the Reserve Bank of India governor’s remarks.

Global brokerage firm Macquarie has also downgraded Paytm’s stock to an “underperform” rating, with a target price of Rs 275. The brokerage believes that Paytm is currently fighting for survival. 

They have identified three key reasons for their downgrade: the risk of losing customers due to recent regulatory actions, increased loss estimates for the company, and a decline in revenues.

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Due to these concerns, experts are advising investors to avoid buying Paytm shares and not to engage in “bottom-fishing,” which means trying to buy stocks at a low price in the hope of making a profit when the price rises.

Please note, that Paytm’s main services and its subsidiary Paytm Payments Bank are 2 different entities. Paytm services will keep working similarly to other UPI apps (like Phone, GPay, BharatPe, etc.) even after February 29.