Paytm Shares Recover Despite Regulatory Woes; Faces Selling Pressure Amidst Ongoing Troubles

20 Mar 2024 , 11:58 PM

Paytm shares recovered from a record low of ₹318.05, hitting a 5% upper circuit in afternoon trade on February 16, reaching ₹333.95 on the NSE.

The rise occurred despite the Enforcement Directorate reportedly questioning Paytm executives and collecting documents after RBI barred Paytm Payments Bank Ltd (PPBL) from accepting deposits or top-ups.

In the previous session, Paytm shares experienced a 5% lower circuit, leading to a 23% decline in the last five trading sessions, eroding investors’ wealth.

Paytm lost ₹27,000 Crore or 57% of its value in the past 11 trading days following the RBI crackdown on Paytm Payments Bank due to persistent non-compliance and supervisory concerns.

The regulator identified significant irregularities in KYC, exposing customers, depositors, and wallet holders to serious risks, with instances of the same PAN linked to more than 100 customers and, in some cases, exceeding 1,000.

The total transaction value surpassed regulatory limits in minimum KYC pre-paid instruments, raising money-laundering concerns.

Sandeep Tandon of Quant MF highlighted an ‘unknown risk’ affecting Paytm, leading to a sustained downturn and eroding market capitalization. He cited regulatory risk and increased selling pressure due to private equity exits as factors influencing the stock. Tandon mentioned that conceptually, Paytm doesn’t face significant issues at current levels, but regulatory concerns contribute to uncertainties.

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