 "paytm")
Shares of One97 Communications, the parent firm of Paytm, declined 3.6 per cent to Rs 410 intraday on the BSE in Saturday's special session after the Financial Intelligence Unit-India (FIU), a branch of the finance ministry's revenue department, levied a Rs 5.49 crore penalty on Paytm Payments Bank.
The penalty was slapped in connection with alleged violations under the Prevention of Money Laundering Act (PMLA), read with PML rules.
At 12:15 PM, the stock was trading 2.6 per cent lower at Rs 414.15 apiece as against 0.12 per cent gain in the benchmark S&P BSE Sensex.
According to a Business Standard report, the FIU began a review of Paytm Payments Bank after receiving specific information from law enforcement agencies about a few entities and their network of businesses being involved in various illegal activities, including the organisation and facilitation of online gambling, the finance ministry said in a statement.
"Further, the money generated from these illegal operations, i.e. proceeds of crime were routed and channelled through bank accounts maintained by these entities with the Paytm Payments Bank," the statement further said. READ HERE
Paytm, on its part, has said that tthe penalty pertains to issues within a business segment that was discontinued two years ago. "Following that period, we have enhanced our monitoring systems and reporting mechanisms to the FIU," the spokesperson said.
Paytm Payments Bank has been on the radar of regulatory agencies ever since the Reserve Bank of India (RBI) imposed severe restrictions on the payments bank's operations.
On January 31, the RBI said that the comprehensive system audit report and subsequent compliance validation report of external auditors revealed persistent non-compliance at PPBL and continued material supervisory concerns in the bank, warranting further supervisory action.
RBI ordered Paytm PB to stop accepting deposits and credit transactions after February 29, which was later extended to March 15.
Following the developmemt, Paytm Payments Bank has reconstituted the board by inducting former bureaucrats and public sector bankers while removing the founder of Paytm and Chief Executive Officer (CEO) of One97 Communications (OCL) Vijay Shekhar Sharma as part-time non-executive chairman and board member.
Amid the developments, global brokerage Jefferies has dropped coverage for Paytm. The brokerage house had earlier given an 'underperform' rating to the fintech firm.
"Factoring in the direct and indirect impact, we now see a 28 per cent year-on-year decline in FY25E revenues that pushes Paytm into cash burns. Still, positive and negative risks arise from user/merchant retention, revenue traction & cost-controls. We move to ‘not rated’ until the news flow settles down," said Jefferies.
Shares of Paytm hit 52-week low of Rs 318 on the BSE on February 16, 2024. While the stock has been volatile since then, it has recovered 33.6 per cent till Friday.
