Paytm stock falls 12% as RBI bars Paytm Payments Bank from taking new customers; brokerage cuts target price: 97 Communications Ltd, it’s parent company, plunged nearly 12% on Monday, hitting an all time low of Rs 672.10 a piece. Shares fell Monday after the Reserve Bank of India barred Paytm Payments Bank Ltd from onboarding new customers. On NSE, shares opened at Rs 675 a piece, down 12.9% from previous close while on the BSE shares opened at Rs 684, down 11.7% from Friday’s close. Following RBI action, brokerage ICICI Securities cut the company’s target price to Rs 1,285 a unit from the previous target price of Rs 1,352 a piece. At 9:52 am, Paytm shares were trading at Rs 682.05 a piece on the BSE index, down 11.9%. RBI’s embargo will have an adverse impact on Paytm for signing up users for new PPBL wallets or savings or current accounts, ICICI Securities said. “Now, expecting moderation in onboarding of new users and the adverse impact on incremental payment revenue (as wallets are a key monetisable payment instrument), we revise our target price to Rs1,285 (earlier Rs1,352). Also, it may defer PPBL’s plan to apply for conversion into a small finance bank (though eligible to apply from May’22). Maintain ‘BUY’,” the brokerage said in a note Monday. ICICI Securities also said recent instances of embargo on a leading bank suggest that lifting of restrictions may take time, ostensibly referring to RBI restrictions on HDFC Bank Limited. In December 2020, RBI had directed HDFC Bank to temporarily halt all digital launches as well as new sourcing of credit card customers, following various outages that the private lender faced. The restrictions were fully lifted on Saturday, after a period of 15 months. Last week, RBI directed Paytm Payments Bank (PPBL) to stop onboarding new customers, effective immediately, citing “certain material supervisory concerns”. It also asked PPBL, which is jointly owned by One 97 Communications and Paytm founder Vijay Shekhar Sharma, to conduct IT audits. Paytm said it is taking immediate steps to comply with the order. Shares of Paytm, which listed on stock exchanges last year, are down nearly 70% from its issue price of Rs 2,150. This is not the first time that Paytm is facing the banking regulator’s ire. In October, RBI fined PPBL Rs 1 crore for submitting information which did not reflect the factual position while applying for its final certificate of authorisation. Before that, in June, 2018, the RBI had prohibited Paytm’s payments bank unit from opening any new accounts and wallets on account of supervisory concerns. However, those conditions were lifted by the end of the year.
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