One 97 Communications Ltd. (Paytm) shares fell again on Thursday, regaining some of the ground they had lost over the previous two days. On the BSE, the stock dropped 9.31% to a low of Rs 450. This contrasted with a 10% increase on Wednesday and a 2.8% increase in the previous trading session.
According to a media report, Paytm Money, the wealth management company owned by Paytm, is allegedly having its customer verification procedure inspected by CDSL, the biggest domestic securities depository. After an instruction from the Reserve Bank of India on January 31, CDSL is reportedly the most recent company to increase its scrutiny of the know-your-customer (KYC) process that is being followed by several Paytm firms.
"We have consistently assured that neither Paytm nor any of its associates are under investigation by any regulatory agency," a Paytm spokeswoman stated on Wednesday. Senior government officials have recently made statements that support this position even further. Our steadfast dedication to adhering to regulatory guidelines and consistently improving our procedures to expand the acceptance of digital payments throughout India.
Paytm recently refuted any inquiry into OCL, its partners, and management conducted by the Enforcement Directorate. Additionally, it refuted rumors that suggested an inquiry into Paytm or its affiliate Paytm Payments Bank Limited (PPBL) breaking foreign exchange regulations was merely conjecture.
The previous two sessions saw gains in the stock as there were rumors that Vijay Shekhar Sharma, the company's founder and CEO, met with top RBI officials and Finance Minister Nirmala Sitharaman to address the company's stance.
Citing the interests of retailers and end users, the CEO reportedly requested an extension of the deadline for Paytm Payments Bank. According to reports, Sharma asked Sitharaman and the RBI to move up the February 29 deadline by one month, according to a BusinessLine story. Sharma is said to have been instructed to resolve the issue directly with the RBI during his ten-minute discussion with the finance minister because it is a regulatory matter.
A Plea for Additional Time
In his private talks with RBI Governor Vijay Shekhar Sharma and Finance Minister Nirmala Sitharaman, Paytm founder Vijay Shekhar Sharma apparently requested an extension of the deadline for Paytm Payments Bank, citing the needs of retail and merchant customers. According to a Businessline story, Sharma asked the RBI and Sitharaman to move forward the February 29 deadline by one month.
Sharma met with the finance minister for ten minutes, during which he was informed that the issue was a "regulatory issue" and that he should deal with the RBI directly. Given its user base and reach, the central bank is anticipated to provide some clarification in the Paytm case. Vivek Joshi, the secretary of financial services, made a suggestion about the action, saying that the RBI was acting to protect consumers.
As requested by the regulator, Paytm Payments Bank is required to pay all pipeline transactions and nodal accounts by March 15, 2024. Reports state that RBI may consider either terminating Paytm Payments Bank's license or changing the board when all pipeline transactions and nodal accounts have been resolved. RBI has already instructed Paytm PB in line with Section 35A of the Banking Regulation Act of 1949.
Approximately 20 percent, or 60 lakh, of the over 3 crore merchants on Paytm's platform use PPBL as their settlement account. Additionally, PPBL is the sponsor bank—technically known as the payment service provider, or PSP bank for the majority of UPI addresses on the Paytm app.
Prior February 29, Paytm is anticipated to move all of these accounts to outside banks in order to ensure that UPI payments function properly. Over 90% of the total retail value on Paytm is made up of UPI.
