Your favourite app is working: Paytm's Vijay Shekhar Sharma assures customers amid RBI directive
Shares of Paytm parent touched the lower circuit for the second consecutive day on Friday, trading at Rs 487.20 apiece, down almost 20%, on Indian bourses.
Paytm Founder Vijay Shekhar Sharma took to X (formerly) to reassure shareholders and customers, stating, "Your favourite app is working, will keep working beyond 29 February as usual."
The CEO responded to shareholders on the social media platform after the Reserve Bank of India (RBI) barred Paytm Payments Bank Ltd from accepting deposits or top-ups in any customer account, prepaid instruments, wallets, and FASTags, among others, after February 29, 2024.
Shares ofparent touched the lower circuit for the second consecutive day on Friday, trading at Rs 487.20 apiece, down almost 20%, on Indian bourses. The stocks had declined nearly 20% on Thursday after the RBI made the announcement.
Moreover, investment banking firm JM Financial has also downgraded the Paytm stock to sell.
“Given the adverse developments, we downgrade the stock to sell with TP (take profit) of 590,” the report noted.
Paytm said withdrawal or utilisation of existing balance is allowed without any restrictions, up to their available balance. The company will pursue partnerships with various other banks to offer payment products to its customers, it added.
One97 Communications Ltd, the parent company of Paytm, possesses a 49% stake in Paytm Payments Bank Ltd but designates it as an associate rather than a subsidiary. The directive from the RBI is expected to affect the annual operational profit of the company, resulting in an estimated impact ranging between Rs 300 crore and Rs 500 crore.
In the October-December 2023 quarter, the fintech giant reduced its loss to Rs 222 crore, benefitting from a 38% increase in revenue. This improvement was attributed to the disbursal of more loans and a higher volume of transactions during the festive season.
The company's revenue for Q3 of FY24 surged to Rs 2,850 crore compared to Rs 2,062 crore a year earlier, primarily driven by a robust performance in its payments and financial services business unit.
(The copy was updated to fix a typo.)
Edited by Suman Singh