RBI Move Forces Paytm to Hit Brakes on Loans for "Couple of Weeks"

2 Feb 2024 , 10:54 AM

Following the Reserve Bank of India’s steps against Paytm Payments Bank, Vijay Shekhar Sharma, the founder of Paytm, called the move a ‘speed bump’ and said the business will ‘see this through the next few days or quarters’ via collaborations with other banks.

On Thursday, Paytm’s stock closed 20% down from where it started.

According to Sharma, there will need to be some operational modifications, on which work has begun. Until these changes are completed, new loan originations will be suspended.

‘We will not be originating loans for a couple of weeks,’ Sharma stated.

In an exchange filing earlier on Thursday morning, Paytm stated that it anticipates an impact on its annual operating income of between ₹300 crore and ₹500 crore as a result of the disruption.

Sharma added that as the Reserve Bank of India has not yet provided any additional information on the action, he is unable to predict what the company will be able to see and what won’t.

The creator of Paytm stated, ‘We are overwhelmed by the support we have received from large banks in the country,’ and One97 Communications announced that it will only collaborate with other banks and not Paytm Payments Banks. He went on to explain that other large institutions have been in touch with them and expressed their willingness to assist.

Following Paytm’s announcement on Wednesday, brokerage house Jefferies reduced its Paytm rating from ‘buy’ to ‘underperform.’ Additionally, the firm lowered its price estimate for the stock from ₹1,050 to ₹500.

With the exception of interest, cashback, or refunds that may be credited at any time, the Reserve Bank of India on Wednesday ordered Paytm Payments Bank to cease deposits, credit transactions, or top-ups in any customer account, prepaid instruments, wallets, FASTags, NCMC cards, etc. after February 29, 2024.

For feedback and suggestions, write to us at [e-mail]