Being unaware of the catastrophe which was about to hit Paytm, retail investors, mutual funds and foreign institutional investors (FIIs) have already raised their stake during the December quarter.
Paytm Catastrophe Traps Investors, FIIs & Mutual Fund
Following the development, the stock fell 42% in just 3 days.
The catastrophe has trapped almost 11 lakh retail shareholders, 514 FIIs and 97 mutual fund schemes.
In the meantime, Paytm founder Vijay Shekhar Sharma has assured employees that there would be no layoffs in the company,in a media report.
Further assuring that the form is engaged with RBI and working with other banks for partnership.
Sharma said that many banks are helping them, during a virtual town hall with employees of Paytm Payments Bank (PPBL) on Saturday, in a media report.
Adding, “You are a part of the Paytm family, and there is nothing to worry about.”
While talking on the subject, Sharma said that they are not completely sure of things “like what exactly went wrong”.
He further assured the employees that “they will figure everything out soon. They will reach out to RBI to see what can be done in the virtual town hall attended by 800-900 employees.”
How Did This Happen?
This all started when RBI directed PPBL to stop onboarding of new customers with immediate effect due to “persistent non-compliances and continued material supervisory concerns in the bank” following a compliance validation report by external auditors On January 31.
In addition to this, RBI asked the Paytm Payments Bank to stop further deposits, credit transactions, top-ups in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards etc after February 29.
It is noteworthy here that the Paytm users can utilize their balances or withdraw the money from their accounts without any restrictions.
Besides this, the nodal accounts of Paytm parent One97 Communications and Paytm Payments Services must be terminated at the earliest.
According to the RBI, all pipeline transactions and nodal accounts must be completed by March 15.
While many speculations were circulating, Paytm parent One97 Communications, responding to certain reports clarified that there has been no investigation by the Enforcement Directorate on the founder and CEO, and the company for money laundering activities in a filing on February 4.
Further clarifying, the company said,“In the past, certain merchants/users on our platforms have been subject to enquiries and on those occasions, we have always cooperated with the authorities. During any such investigations by the authorities on any set of merchants/users in the past, we have cooperated with them on these investigations. This has been previously disclosed to the stock exchanges. We would like to set the record straight and deny any involvement in anti-money laundering activities.”
Following the development, Paytm’s shares were down by 5% in early trade at Rs 415.80 and made a low of Rs 395.
