Paytm (PAYT.NS) shares fell 10% to a near-record low on Monday, extending a slide that began last week in response to a regulatory crackdown on the company’s banking unit.
The Reserve Bank of India (RBI) instructed Paytm Payments Bank on Wednesday to stop accepting new deposits in its accounts or popular wallets in March. Since then, Paytm lost approximately $2.5 billion, or 43% of its market value.
On Monday, the stock fell below its daily trading limit to 438.5 rupees ($5.28), just short of the previous all-time low of 438.35 rupees set in November 2022.
The RBI’s order, which has far-reaching implications for how India’s most popular digital payments app Paytm operates, caused a 20% drop in the stock – its daily high at the time – on Thursday and Friday.
The Hindu Business Line newspaper reported on Monday that Paytm is in talks with HDFC Bank and Jio Financial Services about selling its wallets business, which is part of Paytm Payments Bank.
Reuters’ requests for comment were not immediately responded to by Paytm, HDFC Bank, and Jio Financial.
Three sources familiar with the matter indicate that the RBI discovered hundreds of thousands of Paytm Payments Bank accounts created without proper identification and reported the findings to the country’s financial crime agency.
The RBI is concerned that some of the accounts may have been used for money laundering, according to sources.
Reuters reports that India’s Revenue Secretary, Sanjay Malhotra, said if new charges of fund siphoning were discovered, the agency would investigate Paytm Payments Bank.
It denied money laundering allegations and stated that the company and Paytm Payments Bank have never been investigated by the Enforcement Directorate.
After the stock crashed on Thursday and Friday, India’s stock exchanges reduced Paytm’s daily trading limit to 10%, down from 20% previously.
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