Investors dump shares of Indian fintech giant Paytm after RBI’s strictures on its payments bank

<img width="250" height="141" src="https://www.leaprate.com/wp-content/uploads/2024/02/FIN-LP-Investors-dump-shares-of-Indian-fintech-giant-Paytm-after-RBIs-strictures-on-its-payments-bank-iStock-1386864475-250×141.jpg" class="webfeedsFeaturedVisual wp-post-image" alt="" decoding="async" style="float: left; margin-right: 5px;" link_thumbnail="" srcset="https://www.leaprate.com/wp-content/uploads/2024/02/FIN-LP-Investors-dump-shares-of-Indian-fintech-giant-Paytm-after-RBIs-strictures-on-its-payments-bank-iStock-1386864475-250×141.jpg 250w, https://www.leaprate.com/wp-content/uploads/2024/02/FIN-LP-Investors-dump-shares-of-Indian-fintech-giant-Paytm-after-RBIs-strictures-on-its-payments-bank-iStock-1386864475-700×394.jpg 700w, https://www.leaprate.com/wp-content/uploads/2024/02/FIN-LP-Investors-dump-shares-of-Indian-fintech-giant-Paytm-after-RBIs-strictures-on-its-payments-bank-iStock-1386864475-768×432.jpg 768w, https://www.leaprate.com/wp-content/uploads/2024/02/FIN-LP-Investors-dump-shares-of-Indian-fintech-giant-Paytm-after-RBIs-strictures-on-its-payments-bank-iStock-1386864475-120×67.jpg 120w, https://www.leaprate.com/wp-content/uploads/2024/02/FIN-LP-Investors-dump-shares-of-Indian-fintech-giant-Paytm-after-RBIs-strictures-on-its-payments-bank-iStock-1386864475-245×138.jpg 245w, https://www.leaprate.com/wp-content/uploads/2024/02/FIN-LP-Investors-dump-shares-of-Indian-fintech-giant-Paytm-after-RBIs-strictures-on-its-payments-bank-iStock-1386864475-500×281.jpg 500w, https://www.leaprate.com/wp-content/uploads/2024/02/FIN-LP-Investors-dump-shares-of-Indian-fintech-giant-Paytm-after-RBIs-strictures-on-its-payments-bank-iStock-1386864475.jpg 1366w" sizes="(max-width: 250px) 100vw, 250px" /><p>The PAYTM stock crashed on 5 February to ₹438.35, limit down by 10%, following a staggering 36% fall in the preceding two sessions.</p>
<p>The <a href="https://www.leaprate.com/news/reserve-bank-of-india-eases-foreign-investment-norms-for-exchange-traded-forex-derivatives/" target="_blank" rel="noopener">RBI</a>, India’s Central Bank, issued the directive on 31 January after its inspections at PPBL revealed the bank had failed to comply with some regulations. Non-compliance included Know Your Customer (KYC) procedures, technology infrastructure, and use of funds. The RBI was also concerned about Paytm’s financial and non-financial businesses with promoter group companies.</p>
<p>Allegedly, PPBL also submitted false compliance reports and, in some cases, potentially violated KYC-anti money laundering rules by linking a single PAN card to thousands of accounts.</p>
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<p>PPBL has been treading a thin line on its relationship with the regulator for a while now. In March 2022, the RBI directed the digital bank to stop onboarding new customers and undergo a comprehensive system audit. In October 2023, it imposed a monetary penalty of ₹5.39 crore on PPBL for continued non-compliance with KYC norms and alleged anti-money laundering violations.</p>
<p>Despite the current turmoil, Vijay Shekhar Sharma, Paytm’s founder, has put on a brave front. On Friday, he wrote on X:</p>
<blockquote><p>For every challenge, there is a solution and we are sincerely committed to serve our nation in full compliance.</p></blockquote>
<p>However, these regulatory troubles may have prompted Sharma to explore the sale of PBBL’s wallet unit. According to media reports, HDFC Bank (HDFCBANK) and Jio Financial Services (JIOFIN) are possible suitors for the business.</p>
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