Shares of Paytm’s parent company, One 97 Communications, fell around 8 per cent on Monday, April 27th, during the morning hours after the Reserve Bank of India cancelled the Banking licence of Paytm Payments Bank Ltd.
During early morning trade, the company’s stock was trading at Rs 1077, down 6.1 per cent. The numbers fell as far as 7.96 per cent by 9:25 am. The benchmark Nsc Nifty was up 0.63 per cent.
The cancellation for the banking licence of Paytm Payments Bank Limited has been in effect since April 24.
The bank was barred with immediate effect from carrying on banking business under the Banking Regulation Act 1949 and undertaking additional activities permitted under the law, according to the RBI order dated April 24. The Bank was barred from onboarding new customers with effect from March 2022.
Meanwhile, several Brokerages, such as Goldman Sachs, Bernstein report and Emkay Global have all maintained their ‘Buy’ rating on the stock, target prices ranging from Rs 1400 to Rs 1500. They maintained that the RBI’s license cancellation will not impact Paytm’s core business operation, as they have been separated and secured.
Bernstein maintained its 'Outperform' rating on the stock saying that the compnay had already taken a write-related related to the investments in the bank. It also said that the RBI development could pave the way for the company to apply for a NBFC or PPI licence in the future.
The Paytm Payments Bank had already been under several operational restrictions since January 2024.
In a statement, the company said that the development does not materially impact the near-term earnings, as its banking business had already become largely inoperative and its functions had been transitioned to a partner-led model.
After the RBI action, One97 Communication said, "Upon the winding-up order becoming effective, PPBL shall cease to be an associate company of the company within the meaning of the Companies Act, 2013 and the applicable provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015."
The company said that Paytm Payments Bank will operate as a separate entity with no board or management overlap with One 97 Communications. All its services which include Paytm app, UPI, payment gateway, QR, Soundbox and Paytm Money, continue to operate without interruption, as they are not dependent on the payments bank.
