MUMBAI (AFP) – Paytm shares nosedived almost 13 per cent yesterday after Indian regulators banned the beleaguered payments platform from enrolling new customers and reports emerged that its founder was arrested for crashing into a police car.
The firm enjoyed India’s biggest initial public offering four months ago, with the backing of Chinese tycoon Jack Ma’s Ant Group and Warren Buffett’s Berkshire Hathaway.
But it has since lost more than two-thirds of its market cap despite a commanding position in the local digital payments space, as investors fret over whether the perennial loss-maker will ever turn a profit.
India’s central bank demanded Paytm immediately stop enrolling new customers last Friday and ordered an audit of its IT systems, citing “certain material supervisory concerns observed in the bank”.
Shares in the firm closed 12.84 per cent lower in Mumbai after hitting record lows in yesterday’s trade.
Paytm said it “remains committed to working with the regulator to address their concerns as quickly as possible”.
The firm’s woes were compounded over the weekend after news broke that founder and chief executive Vijay Shekhar Sharma had been briefly detained last month after crashing into a senior police officer’s car in the capital New Delhi and fleeing the scene.
Paytm downplayed the incident in a Sunday statement that characterised the accident as a “minor offence”.
Sharma, named India’s youngest billionaire in 2017, launched Paytm in 2010 and quickly made the platform synonymous with digital payments in a country traditionally dominated by cash transactions.
His enterprise has benefitted from government efforts to curb the use of hard currency – including the demonetisation of nearly all banknotes in circulation five years ago – and from the pandemic.
The platform had 350 million customers at the end of December, according to the company’s regulatory filing.
But the last few months have seen a dramatic reversal of fortunes for the platform and Sharma has seen his net worth written down by over USD1.5 billion since its November 2021 market debut.
Paytm’s parent One97 Communications reported a net loss of INR7.79 billion (USD102 million) for the December quarter.
