Paytm Narrows Losses as Analysts Downplay Impact of Bank Licence Cancellation

Shares of One 97 Communications, widely known as Paytm, recovered most of their early losses after an initial sharp drop on Monday. The stock had fallen over 8% following the cancellation of the licence of its associate, Paytm Payments Bank, but later pared losses to trade only slightly lower. Analysts suggested the overall impact on Paytm’s core business would be limited.

India’s central bank, the Reserve Bank of India, revoked the payments bank’s licence citing concerns over management practices and compliance issues. Paytm holds a 49% stake in the bank, while founder Vijay Shekhar Sharma owns the remaining majority. However, analysts noted that Paytm had already distanced its operations from the bank and had fully impaired its investment earlier.

Brokerages said Paytm remains financially and operationally insulated, as commercial ties with the bank were ended previously. While some risks remain regarding future regulatory approvals, the company’s board has approved winding up the payments bank, stating that it does not expect any adverse impact on its business.

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