Following the strict measures by the Reserve Bank of India (RBI), Paytm, the company providing online payment services, is currently grappling with a significant crisis.
Ever since the banking branch of the company, Paytm Payments Bank was banned by the RBI, there has been a substantial decline in the company's shares, plummeting by more than 43% in just 3 days.
Despite this crisis, Paytm has not only reassured its users but also urged its employees not to worry.
Paytm Founder and CEO, Vijay Shekhar Sharma, has reportedly provided significant reassurance to his employees during these challenging times.
According to a report in Business Today, Sharma mentioned that he is not entirely certain about what went wrong in reality, but he is confident that all issues will be resolved soon.
This assurance was conveyed by Vijay Shekhar Sharma during a virtual town hall meeting.
According to reports, during this town hall meeting, besides Paytm founder, the company's President and COO, Bhavesh Gupta, along with Paytm Payment Bank CEO Surinder Chawla were also present.
Meanwhile, Vijay Shekhar Sharma mentioned that there will be no layoffs in the company, and they are continuously in discussions with the RBI.
Additionally, Paytm is also working with other banks for partnerships. He further assured his employees by saying, "You are all part of the Paytm family, and there is nothing to worry about."
On January 31, 2024, the Reserve Bank of India (RBI) issued an order to ban Paytm Payment Bank's services amid concerns of non-compliance and material supervisory concerns following an audit report and reports verified by external auditors.
The central bank stated that this order would come into effect after February 29. Consequently, Paytm Payment Bank will neither be able to onboard new customers nor accept deposits/top-ups in customer accounts, wallets, and FASTags after this specified date.
RBI has taken this action under Section 35A of the Banking Regulation Act, 1949. The Reserve Bank has directed Paytm to settle its nodal accounts by March 15.
On February 4, 2024, One97 Communication Limited, the parent company of Paytm, filed a statement refuting claims of the investigation by the Enforcement Directorate (ED) for alleged money laundering activities.
The company explicitly stated that no such investigation had taken place. The filing also mentioned ongoing inquiries with certain traders/users on their platform, emphasizing their continuous cooperation with authorities, a fact previously disclosed.
Despite this clarification, Paytm's shares have witnessed a significant decline since the RBI's recent actions. Within the last three days, Paytm shares have plummeted by over 43%.
On Monday, the first trading day of the week, the share market opened with a 10% lower circuit, bringing the shares down to Rs. 438.50.
Consequently, the company's market capitalization has also dropped to Rs. 27,850 crore.