Paytm Shares Depreciate Following Restrictions By The Reserve Bank Of India
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Paytm, a payment giant in India, has seen a significant drop in share price by 20% in two consecutive days. $2 billion was lost from its original market value. This happened after its business was hit with severe restrictions by the Reserve Bank of India (RBI).
On Wednesday, the RBI declared that beginning from 29 February, the payments bank section will no longer receive deposits in its accounts. Furthermore, the wallet services, which are an essential part of Paytm’s business, will also stop deposits.
Also, the unit won’t permit money transfers, and cannot render credit services. The RBI declared that the reasons behind the recent restrictions are because of some worries in the supervisory bank sector and persistent inability to comply.
Paytm Expects A Tougher Financial Situation If Issues With RBI Persist
Paytm announced that complying with the RBI instruction is a step-by-step process, and it expects a harder situation that could take away three to five billion rupees from its yearly income.
Paytm’s Chief Executive Officer, Vijay Shekhar Sharma, has reassured the market and customers that bringing in innovative banking partnerships won’t be too much of an issue.
He also noted that their favorite app still functions properly and will continue to do so beyond 29 February regularly.
However, analysts revealed that the new restriction could have a deeper impact, particularly in affecting the trust customers have in Paytm. Also, it will be difficult for the company to get new partnerships because of its regulatory troubles.
Paytm Still Faces Competition From Other Service Providers
Paytm was launched more than ten years ago and it became significantly popular in 2016. This was after an increase in the value of India’s currency notes by their government. Paytm benefited from the COVID-19 pandemic with customers making lots of payments at that time.
The company was fully recognized by the public in 2021. But it is finding it difficult to gain much profit because of slim margins and much competition from other institutions that render similar services.
Paytm is an Indian financial company that focuses on financial services and digital payments. The company renders its payment services to its customers. Merchants can collect payments via payment soundbox, QR code, and others.
In collaboration with financial organizations, Paytm renders financial services like BUY NOW, PAY LATER, and microloans to its merchants and customers. The firm also offers ticketing services, online games, and retail brokerage.
