Gate News message, April 27 — Shares of Paytm, an Indian payments and financial services company, fell as much as 8.4% before paring losses to around 3.5% after the Reserve Bank of India (RBI) canceled the banking license of Paytm Payments Bank last week. The RBI said the bank had faced restrictions since 2022 due to breaches in customer due diligence (KYC verification), fund usage, and technology infrastructure. Allowing it to continue would not serve depositors or the public interest, the regulator stated.
The compliance issues were significant. Regulators found hundreds of thousands of accounts lacking proper Know Your Customer (KYC) verification, an identity check required by financial firms. Additionally, thousands of cases showed a single Permanent Account Number (PAN), India’s tax identification number, linked to multiple accounts, raising money laundering concerns. The RBI also found that compliance reports submitted by the bank were incomplete or false, signaling broader governance problems.
Parent company One 97 Communications approved winding up the bank and will accelerate partnerships with third-party banks to distribute payments and financial services. Some merchants may need new payment arrangements if their Paytm QR codes, soundboxes, or POS terminals are tied to Paytm Payments Bank accounts. Users holding FASTags (electronic toll payment stickers) issued by the bank will need replacements, as top-ups cease after March 15, 2024. Paytm expects a direct annual EBITDA (operating profit) impact of 300–500 crore rupees (approximately $32–54 million USD), with potential longer-term damage from eroded customer trust.
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