Shares of Paytm parent One 97 Communications hit an all-time low on Wednesday after a media report claimed that its key lending partner Aditya Birla Finance invoked loan guarantees which the digital payments company had offered in case of repayment defaults by customers.
The stock opened at ₹330.55 against its previous closing price of ₹334.15. During the intraday trade, shares of the Vijay Shekhar Sharma-led company tumbled 5% to hit a record low of ₹317.45 on the BSE, taking the company’s market cap to ₹20,000 crore. At the time of its initial public offering (IPO) in 2021, Paytm was valued at $20 billion (₹1.6 lakh crore).
Shares of the beleaguered digital payments company have witnessed a selloff after Paytm president and chief operating officer Bhavesh Gupta has decided to resign due to personal reasons. Gupta, who was overseeing the payments and lending businesses, has decided to take a career break due to personal reasons, Paytm said in a regulatory filing on Monday. “He will be transitioning to an advisory role, offering guidance for Paytm’s growth initiatives until the end of the year. The leadership will focus on profitable business expansion and is committed to regulatory compliance,” the filing said.
“I have decided to take a career break due to personal reasons. I look forward to supporting Paytm in an advisory role. I am confident of Paytm reaching new heights given the depth of leadership in payments and financial services that has been built over the past few years,” said Gupta.
The selloff comes weeks after Paytm Payments Bank CEO Surinder Chawla tendered his resignation on April 8, 2024, on account of personal reasons and to explore better career prospects. Chawla will be relieved from Paytm Payments Bank with effect from close of business hours on June 26, 2024.
In January, the Reserve Bank of India (RBI) ordered Paytm Payments Bank, a subsidiary of One 97 Communications, to stop accepting fresh deposits in its accounts and wallets from March. Paytm Payments Bank is 51% owned by Paytm CEO Vijay Shekhar Sharma while the remaining 49% is owned by One 97 Communications.
RBI governor Shaktikanta Das said the banking regulator gave ample time to Paytm Payments Bank to comply with regulations and business restrictions were imposed only when the entity did not listen to constructive engagement.
The stock rout since has shaved off half of Paytm's market cap.
The National Payments Corporation of India (NPCI) in March granted approval to One97 Communications to participate in UPI as a third-party application provider (TPAP). Paytm is now working with Yes Bank, Axis Bank, State of India and HDFC Bank under a multi-bank TPAP model. For loan and credit card distribution, the company continues to work with NBFC and bank partners.
