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Troubling times have hit Paytm, founded by Vijay Shekhar Sharma, shares as they’ve experienced a precipitous drop, soaring down by 20% for two consecutive days.

  • Central bank clampdown: The sharp drop follows the Reserve Bank of India’s (RBI) directive for Paytm’s arm, Paytm Payments Bank Ltd., to halt many of its operations due to ongoing non-compliance issues including accepting fresh deposits and credit transactions across its services.
  • Ratings downgrade: Analysts like JPMorgan Chase & Co. and Citigroup Inc. have adjusted their outlook on Paytm to ‘sell’, signaling waning confidence.
  • Market value meltdown: Over $2B has been wiped from Paytm’s market cap, dealing a blow to investors such as Alibaba’s Antfin and SoftBank Group Corp.
  • Long-term concerns: The RBI’s order is a significant hit, impacting 59% of Paytm’s core payments business. JPMorgan analysts point out the potential erosion of the Paytm “merchant-consumer” ecosystem and its brand reputation unless they pivot swiftly to collaborating with other banking entities.
  • Stocks in distress: Paytm’s shares have now slumped approximately 77% since its 2021 IPO.
  • Looking ahead: Despite the tumult, Paytm reassured in a recent conference call that operations should return to normal by early March, with expedited plans to partner with other banks to resume full services.

The situation remains volatile, and whether Paytm can navigate through these regulatory headwinds without lasting damage to its business model remains to be seen.

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