Paytm hits record low as company denies ED probe

Shares of One 97 Communications, the parent entity of Paytm, hit 10% lower circuit on Monday, dragging down the stock to an all-time low of ₹438.35 on the BSE.

The fintech stock has declined 42% in the last three sessions, taking the Noida-based company's market capitalisation under ₹30,000 crore.

This comes a day after the SoftBank-backed digital payments firm said neither the company nor its founder and CEO Vijay Shekhar Sharma are being investigated by the Enforcement Directorate (ED) regarding money laundering.

"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," the beleaguered company says in a stock exchange filing.

"We would like to set the record straight and deny any involvement in anti-money laundering activities. We have and continue to abide by Indian laws and take regulatory orders with utmost seriousness," the filing says.

"There are other stories in various media, including social media, which are spreading speculation and misinformation on the reasons for RBI action on Paytm Payments Bank," it adds.

The Reserve Bank of India (RBI) last week ordered Paytm Payments Bank, a subsidiary of One 97 Communications, to stop accepting fresh deposits in its accounts and wallets from March. Paytm Payments Bank is 49% owned by One 97 Communications while the remaining 51% is held by Paytm CEO Sharma.

Paytm had earlier said that the RBI's directive to its banking subsidiary Paym Payments Bank does not impact user deposits in their savings accounts, wallets, FASTags, and NCMC (National Common Mobility Card) accounts, where they can continue to use the existing balances.

One 97 Communications was earlier relying on its associate entity Paytm Payments Bank for banking services. The parent now plans to completely move to other banking partners. "Going forward, OCL will be working only with other banks, and not with Paytm Payments Bank Limited," it said.

Depending on the nature of the resolution with the banking regulator, Paytm expects the RBI action action to have a worst case impact of ₹300 crore to ₹500 crore on its annual earnings before interest, taxes, depreciation, and amortisation (EBITDA) going forward.

"We offer acquiring services to merchants in partnership with several leading banks in the country and will continue to expand third-party bank partnerships. The Paytm Payment Gateway business (online merchants) will continue to offer payment solutions to its existing merchants. OCL's offline merchant payment network offerings like Paytm QR, Paytm Soundbox, Paytm Card Machine, will continue as usual, where it can onboard new offline merchants as well," it said.