Paytm debacle traps 11 lakh retail investors, 514 FIIs

Retail investors, mutual funds and foreign institutional investors (FIIs) happened to raise their stake during the December quarter. Reason being, they were becoming aware of the catastrophe which was about to hit Paytm.

Following the development, the stock fell 42% in just 3 days. The catastrophe has trapped almost 11 lakh retail shareholders, 514 FIIs and 97 mutual fund schemes.

Meanwhile Paytm founder Vijay Shekhar Sharma has assured employees that there would be no layoffs in the company, further assuring that the firm is engaged with RBI and working with other banks for partnership.

Sharma reportedly said that many banks are helping them, during a virtual town hall with employees of Paytm Payments Bank (PPBL) on Saturday.

He is reported to have said to his employees, “You are a part of the Paytm family, and there is nothing to worry about.”

While talking on the subject, Sharma said that they are not completely sure of things “like what exactly went wrong”.  He further assured the employees that “they will figure everything out soon. They will reach out to RBI to see what can be done in the virtual town hall attended by 800-900 employees.”

This all started when, following a compliance validation report by external auditors On January 31, RBI directed PPBL to stop onboarding new customers with immediate effect due to “persistent non-compliances and continued material supervisory concerns in the bank”.

In addition to this, RBI asked the Paytm Payments Bank to stop further deposits, credit transactions, top-ups in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards etc after February 29.

While many speculations had been rife, Paytm parent One97 Communications, clarified that there has been no investigation by the Enforcement Directorate on the founder and CEO, or the company for money laundering activities, in a filing on February 4.

In the wake of the development, Paytm’s shares were down by 5% in early trade at Rs 415.80 and made a low of Rs 395.