Payments

India’s Paytm Bleeds Amid Financial Crime Probe in Banking Arm

 

Shares in Indian fintech giant Paytm slumped 10% on Wednesday amid reports that the country’s financial crimes unit was probing overseas transactions by the firm’s banking arm.

“This is a preliminary examination,” one of the government sources in New Delhi said.

This was the second successive day of circuit-limit losses for the company that was once a darling of foreign investors, including investment guru Warren Buffett, Japan’s SoftBank and China’s Ant Group.

 

Also on AF: India’s High Taxes Will Crush Export Goals, Tech Ministry Warns

 

Paytm has lost nearly 50% of its market value since January 31, resulting in roughly $3 billion of its shareholder wealth.

It hit a record low of 342.15 rupees at the close of trade on Wednesday — its sixth such instance since India’s central bank tightened the regulatory noose around the payments firm’s banking unit.

At the close of January, the Reserve Bank of India (RBI) ordered the Paytm Payments Bank to wind down much of its business by February 29, citing persistent and serious supervisory concerns.

The clampdown would force Paytm’s banking affiliate to shut most of its business, including deposits, credit products and the popular digital wallets which were among the primary drivers of India’s digital payments boom.

Reuters reported last week that Enforcement Directorate was investigating if Paytm and its banking associate were involved in violations of foreign exchange rules.

The investigating agency had first sought more information from the RBI.

Paytm has, meanwhile, repeatedly denied any wrongdoing, and did so again on Wednesday. “We have always complied with the requirements dutifully,” Paytm told CNBC-TV18.

In 2021, Paytm’s IPO became India’s largest ever share-offering, raising $2.46 billion. Successive regulatory hurdles and an inability to breakeven, however, led all major investors including Buffett, Ant and SoftBank to exit the group.

The company’s since slumped more than 84% from its issue price of Rs 2,150, eroding $14.5 billion of investor wealth, according to CNBC-TV18.

 

  • Reuters, with additional inputs from Vishakha Saxena

 

Also read:

 

Buffett Dumps India Payments Giant Paytm at Over $60m Loss

 

Alibaba Sells Final Stake in India’s Paytm For $167 Million

 

India’s Paytm Shares Slump 10% as SoftBank Cuts Stake

 

India’s Paytm in 2023 Profits Pledge After IPO Flop

 

Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at vishakha.saxena@asiafinancial.com

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