Paytm’s connections with its Chinese investors have started to weigh heavy on the digital payments firm.
On Monday, the financial services firm was sucked into a raging controversy whether it had started to share data on its domestic customers with its overseas Chinese investors — an accusation that the company vehemently denied.
Last week, the Reserve Bank of India barred Paytm Payments Bank Ltd (PPBL) from taking on new customers even as it ordered an independent audit of its informational technology systems without actually spelling out the cause for concern.
The RBI’s precipitate action immediately stoked concerns that have engulfed One97 Communications Ltd, the parent firm of Paytm, which came out with the country’s largest initial public offering of Rs 18,300 crore last year that has wilted under snowballing concerns about its antecedents.
Shares of One97 Communications Ltd, the parent firm of Paytm, on Monday tumbled nearly 13 per cent
A Bloomberg report on Monday said that action was taken against the payment banking arm of Paytm as it violated rules by allowing data to flow abroad. It added that annual inspections by the RBI found that the company’s servers were sharing information with China-based entities that indirectly own a stake in PPBL. This was however, denied by PPBL.
Investors in Paytm do not have access to customer data of its payments bank, Sharma told Reuters in an interview on Monday, seeking to allay concerns over reports of user data being leaked to Chinese firms. Paytm is backed by China’s Alibaba Group Holding and its affiliate Ant Group.
Paytm has denied the news report from Bloomberg .
The RBI action is the latest setback for Paytm, which had a flop stock market debut in November.
Sharma told Reuters “we are confident” of addressing RBI’s concerns at the earliest.
In a separate statement, a Paytm spokesperson said its payments bank data resides within the country.
Based on Monday’s closing, the counter has fallen almost 69 per cent from its issue price of Rs 2,150 per share. At the BSE, the Paytm share opened weak at Rs 684 and hit an intra-day low of Rs 662.25 — a drop of over 14.50 per cent.
It ended at Rs 675.35 — a fall of 12.84 per cent or Rs 99.45 over the previous close. At the NSE, the share settled 12.21 per cent lower at Rs 680.40.
Indian authorities last week raided the offices of Chinese tech giant Huawei Technologies in Delhi over suspected tax evasion, triggering a protest from Beijing.