Shares of One 97 Communications, Paytm's parent fell around 8% during opening trading hours on Monday, April 27 after the Reserve Bank of India cancelled the banking licence of Paytm Payments Bank Ltd.
Paytm share price fell 7.96% to trade at Rs 1,056.05 apiece. The scrip was trading 6.61% lower by 9:25 a.m. The benchmark NSE Nifty 50 was up 0.63%.
The RBI cancelled the banking licence of Paytm Payments Bank Limited effective April 24 and said it will seek to wind up the lender, escalating regulatory action after a series of earlier restrictions on its operations.
The bank was barred with immediate effect from carrying on banking business as defined under the Banking Regulation Act, 1949, or undertaking any additional activities permitted under the law, according to the central bank's order dated April 24. The regulator said Paytm Payments Bank has sufficient liquidity to repay all deposit liabilities during the winding-up process.
Following the order, Paytm Payments Bank's board of directors and shareholders passed resolutions to start the winding-up process ei,ther as directed by the RBI or voluntarily with its approval, the company said in a stock exchange filing.
RBI's action comes after supervisory curbs imposed on the lender over the past four years. The bank was ordered to stop onboarding new customers from March 2022,. Further restrictions were announced on January 2024, and in February 2024 barred further deposits, credits and top-ups in existing customer accounts, prepaid instruments and wallets.
The central bank cited multiple grounds for cancelling the licence, stating that the affairs of the bank were conducted in a manner detrimental to the interests of the bank and its depositors, while the character of its management was prejudicial to depositors and the public interest.
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