Shares in India’s Paytm tumbled more than 12% on Tuesday, after the country’s central bank barred the company’s payments bank from taking on new customers and ordered an audit of its IT systems.
The stock price plunge came after CEO Vijay Shekhar Sharma said on Monday – when its shares dropped 13% – that investors in Paytm do not have access to customer data at its payments bank, as he looked to allay concerns over reports of leaks to Chinese firms.
Paytm is backed by China’s Alibaba Group Holding and its affiliate Ant Group.
The Reserve Bank of India made its move citing “material” supervisory concerns observed in the bank, without elaborating further.
Sharma said no investor had access to the company’s customer data, and the country’s central bank had raised no concerns related to data storage or access.
“There is no access of any bank customer data to any person, of any nationality … RBI has [in its observations] not mentioned anything in relation to investors,” Sharma said.
Paytm Payments Bank, which facilitates transactions on mobile commerce platform Paytm, has over 300 million wallets and 60 million bank accounts, according to its website. Paytm is one of India’s most popular digital payments service.
Shares of Paytm slumped on Monday after RBI’s move, with Macquarie Research analysts saying they expect a significant impact on Paytm’s brand and customer loyalty.
The RBI action is the latest setback for Paytm, which had a flop stock market debut of its $2.5bn IPO in November. Its shares are down almost 70% from the issue price.
Sharma said “we are confident” of addressing RBI’s concerns at the earliest. The RBI has ordered a comprehensive audit of Paytm Payment Bank’s IT systems.
In a separate statement, a Paytm spokesperson said its payments bank data resides within the country.
The RBI did not immediately respond to a Reuters request for comment.
- Reuters with additional editing by Sean O’Meara