SoftBank reportedly divested a significant portion of its stake in Paytm before the Reserve Bank of India's (RBI) order caused a decline in the fintech firm's shares.

According to Bloomberg News on Thursday, SoftBank, based in Tokyo, observed a growing sense of uncertainty in India's regulatory landscape, particularly regarding Paytm Payments Bank Ltd.'s license, stated Navneet Govil, the Vision Fund's finance chief.

Govil remarked, "We felt it was prudent to start monetizing," indicating the decision to sell a substantial portion of Paytm shares. He added, "We're glad we did a good portion of Paytm before the recent stock correction."

SoftBank has been gradually offloading its holdings in Paytm since at least November 2022 through the previous month. As of January, the Japanese investor's stake in Paytm stood at approximately 5%, a significant reduction from its approximately 18.5% stake during the payments company's initial public offering in 2021.

Over the last two years, Paytm has received several warnings from regulators concerning the interactions between its popular payments app and its banking arm. The Reserve Bank of India's suspension of much of the banking operation's business led to a decline of over 40% in Paytm's stock price from its peak in January.

Earlier, SoftBank reported its first profit following four consecutive quarters of losses, with its Vision Fund also recording a profit in the December quarter. However, new investments by the startup investment arm have decreased significantly compared to its previous activity, being overshadowed by exit transactions.