Shares in Indian fintech giant Paytm slumped 10% on Wednesday amid reports that the country’s financial crimes unit was probing overseas transactions by the firm’s banking arm.
“This is a preliminary examination,” one of the government sources in New Delhi said.
This was the second successive day of circuit-limit losses for the company that was once a darling of foreign investors, including investment guru Warren Buffett, Japan’s SoftBank and China’s Ant Group.
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Paytm has lost nearly 50% of its market value since January 31, resulting in roughly $3 billion of its shareholder wealth.
It hit a record low of 342.15 rupees at the close of trade on Wednesday — its sixth such instance since India’s central bank tightened the regulatory noose around the payments firm’s banking unit.
At the close of January, the Reserve Bank of India (RBI) ordered the Paytm Payments Bank to wind down much of its business by February 29, citing persistent and serious supervisory concerns.
The clampdown would force Paytm’s banking affiliate to shut most of its business, including deposits, credit products and the popular digital wallets which were among the primary drivers of India’s digital payments boom.
Reuters reported last week that Enforcement Directorate was investigating if Paytm and its banking associate were involved in violations of foreign exchange rules.
The investigating agency had first sought more information from the RBI.
Paytm has, meanwhile, repeatedly denied any wrongdoing, and did so again on Wednesday. “We have always complied with the requirements dutifully,” Paytm told CNBC-TV18.
In 2021, Paytm’s IPO became India’s largest ever share-offering, raising $2.46 billion. Successive regulatory hurdles and an inability to breakeven, however, led all major investors including Buffett, Ant and SoftBank to exit the group.
The company’s since slumped more than 84% from its issue price of Rs 2,150, eroding $14.5 billion of investor wealth, according to CNBC-TV18.
- Reuters, with additional inputs from Vishakha Saxena
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