{"id":7801,"date":"2022-03-15T17:53:23","date_gmt":"2022-03-15T12:23:23","guid":{"rendered":"https:\/\/www.tickertape.in\/blog\/?p=7801"},"modified":"2022-03-15T18:09:19","modified_gmt":"2022-03-15T12:39:19","slug":"paytm-payment-bank-down-13-rbi-banned-adding-new-customers","status":"publish","type":"post","link":"https:\/\/www.tickertape.in\/blog\/paytm-payment-bank-down-13-rbi-banned-adding-new-customers\/","title":{"rendered":"Paytm down 13%! RBI Bans Payments Bank Arm From Adding New Customers"},"content":{"rendered":"\n<p><a href=\"https:\/\/www.tickertape.in\/stocks\/one-97-communications-PAY?utm_source=blog&amp;utm_medium=article\" target=\"_blank\" rel=\"noreferrer noopener\">Paytm<\/a>, India\u2019s largest <a href=\"https:\/\/www.tickertape.in\/blog\/ipo-investment\/\">IPO<\/a> has managed to be the talk of Dalal Street ever since its listing, given the unyielding freefall in its stock price. This time around, it nosedived ~13% on Monday after its digital processor Paytm Payments Bank allegedly violated data storage rules.<\/p>\n\n\n\n<p>On 11 March 2022, the Reserve Bank of India (RBI) had restricted Paytm from the payments bank against acquiring new users. This begs investors to pay attention to internal controls. Besides, the bank is also required to get its IT system audited by an IT audit firm.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_66_1 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.tickertape.in\/blog\/paytm-payment-bank-down-13-rbi-banned-adding-new-customers\/#What-went-wrong\" title=\"What went wrong?\">What went wrong?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.tickertape.in\/blog\/paytm-payment-bank-down-13-rbi-banned-adding-new-customers\/#How-did-Paytm-respond\" title=\"How did Paytm respond?\">How did Paytm respond?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.tickertape.in\/blog\/paytm-payment-bank-down-13-rbi-banned-adding-new-customers\/#Data-localisation-issues\" title=\"Data localisation issues\">Data localisation issues<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.tickertape.in\/blog\/paytm-payment-bank-down-13-rbi-banned-adding-new-customers\/#Drop-in-share-price-and-valuation\" title=\"Drop in share price and valuation\">Drop in share price and valuation<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What-went-wrong\"><\/span><strong>What went wrong?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Paytm Payment\u2019s Bank\u2019s servers shared information with China-based entities that indirectly held a stake in the bank. However, Paytm\u2019s founder and majority shareholder Vijay Shekhar Sharma has denied this allegation. Moreover, the company has onboarded several customers without adequate KYC documentation, resulting in potential money laundering.<\/p>\n\n\n\n<p>As per its website, Paytm Payments Bank has over 300 mn wallets and 60 mn bank accounts. Ironically, its website also refers to the payment bank as \u201cIndia\u2019s most sincere bank\u201d even when it has 100 mn KYC-compliant customers and adds ~4 lakh new users to its platform monthly.<\/p>\n\n\n<span class='bctt-click-to-tweet'><span class='bctt-ctt-text'><a href='https:\/\/twitter.com\/intent\/tweet?url=https%3A%2F%2Fwww.tickertape.in%2Fblog%2Fpaytm-payment-bank-down-13-rbi-banned-adding-new-customers%2F&#038;text=As%20per%20its%20website%2C%20Paytm%20Payments%20Bank%20has%20over%20300%20mn%20wallets%20and%2060%20mn%20bank%20accounts.%20It%20has%20100%20mn%20KYC-compliant%20customers%20and%20adds%20~4%20lakh%20new%20users%20to%20its%20platform%20monthly.&#038;via=TickertapeIN&#038;related=TickertapeIN' target='_blank'rel=\"noopener noreferrer\">As per its website, Paytm Payments Bank has over 300 mn wallets and 60 mn bank accounts. It has 100 mn KYC-compliant customers and adds ~4 lakh new users to its platform monthly. <\/a><\/span><a href='https:\/\/twitter.com\/intent\/tweet?url=https%3A%2F%2Fwww.tickertape.in%2Fblog%2Fpaytm-payment-bank-down-13-rbi-banned-adding-new-customers%2F&#038;text=As%20per%20its%20website%2C%20Paytm%20Payments%20Bank%20has%20over%20300%20mn%20wallets%20and%2060%20mn%20bank%20accounts.%20It%20has%20100%20mn%20KYC-compliant%20customers%20and%20adds%20~4%20lakh%20new%20users%20to%20its%20platform%20monthly.&#038;via=TickertapeIN&#038;related=TickertapeIN' target='_blank' class='bctt-ctt-btn'rel=\"noopener noreferrer\">Click To Tweet<\/a><\/span>\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How-did-Paytm-respond\"><\/span><strong>How did Paytm respond?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The entity\u2019s parent company, One97 Communications, is reportedly taking steps to comply with the RBI directions. Meanwhile, new users can still sign up for the Paytm app, transact via UPI, and link them to their registered bank accounts or third-party payment instruments.<\/p>\n\n\n\n<p>The company believes that RBI\u2019s restrictions on its payments bank business will not have a material impact on its overall business. Nonetheless, this wasn\u2019t welcome news for Paytm, the new-age tech company that has been struggling even to sustain revenue and generate profit.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Data-localisation-issues\"><\/span><strong>Data localisation issues<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Paytm is not the first company to be alleged about violating data storage rules in India. In fact, the issue has significantly increased in the country over the last decade. Previously, the RBI had penalised foreign card-payment network companies, including Visa, American Express, and Mastercard, for not complying with India\u2019s data storage norms.<\/p>\n\n\n\n<p>Given India\u2019s changing technology landscape, the government is considering introducing a new privacy bill and scrapping the current version of the personal data protection bill 2019.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Drop-in-share-price-and-valuation\"><\/span><strong>Drop in share price and valuation<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Compared to Paytm\u2019s valuation of Rs 1.5 lakh cr. at the time of its <a href=\"https:\/\/www.tickertape.in\/blog\/paytm-ipo\/?utm_source=blog&amp;utm_medium=article\">IPO<\/a>, the stock&#8217;s valuation is now below a whopping Rs 44,000! Talking about its share price, there has been a 70% drop compared to the issue price of Rs 2,150.<\/p>\n\n\n\n<p>Given its plan to apply for a small finance bank licence, how will RBI\u2019s direction on Paytm impact its plans?<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Paytm fell a whopping ~13% on Monday after RBI imposed restrictions on its payments bank arm due to an alleged data storage violation.<\/p>\n","protected":false},"author":27,"featured_media":7802,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[10,1744],"tags":[344,1146,1087],"acf":[],"modified_by":"Aradhana Gotur","jetpack_featured_media_url":"https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2022\/03\/5.png?wsr","_links":{"self":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/7801"}],"collection":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/users\/27"}],"replies":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/comments?post=7801"}],"version-history":[{"count":5,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/7801\/revisions"}],"predecessor-version":[{"id":7808,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/7801\/revisions\/7808"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media\/7802"}],"wp:attachment":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media?parent=7801"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/categories?post=7801"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/tags?post=7801"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}