Paytm shares crash 10% to all-time lows as ED may initiate probe

Paytm shares went deeper into the red, hitting its lower circuit of 10  percent on February 14 to touch a lifetime low, as crisis looked far from over for parent One97 Communications.

Sources told  CNBC-TV18 that the Enforcement Directorate has initiated preliminary inquiry against Paytm Payments Bank Ltd (PBBL).

As of 3.10 pm, the Paytm shares were quoting Rs 342.15 on the NSE, lower by 10 percent, touching a fresh lifetime low.

Fintech firm Paytm had said, "We have always complied with the requirements dutifully by furnishing requisite information."

The ED will probe Paytm Payments Bank if any fresh charges of fund siphoning are found, Revenue Secretary Sanjay Malhotra told Reuters earlier this month.

From its 52-week high of Rs 998.3, which the counter touched in October 2023, the stock price has crashed 65.5 percent, with most of the losses being recorded since the Reserve Bank of India slapped restrictions on Paytm Payments Bank on January 31.

Since January 31, the Paytm shares have shed more than half their value, tanking around 53 percent.

The RBI placed restrictions on Paytm Payments Bank Ltd (PPB), an associate company of One97 Communications, saying the actions were warranted by “persistent non-compliances and continued material supervisory concerns in the bank”.

The regulator found major irregularities in KYC, which exposed the customers, depositors, and wallet holders to serious risks. In its probe, the regulator found that in thousands of cases, the same PAN was linked to more than 100 customers and in some cases to more than 1,000 customers. The total value of transactions, running into crores of rupees, is much beyond the regulatory limits in minimum KYC pre-paid instruments, raising money-laundering concerns.

The RBI directed PPB to stop accepting deposits, credit transactions or top-ups in customer accounts, prepaid instruments, wallets, FASTags, and NCMC cards after February 29, other than any interest, cashbacks, or refunds. It also ordered the payments bank to settle all pipeline transactions and nodal accounts by March 15.

In the two weeks since the RBI directive, foreign brokerages like CLSA, Morgan Stanley, Jefferies, Bernstein have cut their target prices for One 97 Communications (Paytm) by 20-60 percent, with Macquarie the biggest bear on the Street. The agency has downgraded One97 Communications to 'underperform' and sharply cut the target price to Rs 275 from Rs 650.

Macquarie's downgrade came exactly a year after it had double-upgraded the stock from to 'outperform' from 'underperform'.