Paytm Share Price: One97 Communications Shares Plunge Over 8% After RBI Cancels Payment Bank's License

Paytm Share Price: The shares of One97 Communication Ltd, the parent company of Fintech firm Paytm, fell over 8 per cent in early trade on Monday after the Reserve Bank of India (RBI) cancelled the banking license of Paytm Payment Bank Limited.

It is the biggest intraday drop in payment and financial services provider shares in over three months. However, the Paytm shares later recovered some losses. At the time of writing, the stock was trading at Rs 1,111.45, down Rs 35.90 or 3.13 per cent on NSE.

Also Read: Paytm Payments Bank's Licence Cancelled: When Are Customers Likely To Get Refund?

RBI Cancels Licence

Earlier, last week, the RBI cancelled the banking licence of Paytm Payments Bank Ltd (PPBL), with immediate effect, for failing to comply with the payments bank licence norms.

The RBI issued an official statement on the licence cancellation of Paytm Payments Bank Limited, saying no useful purpose or public interest would be served by allowing the Paytm Payments Bank to continue.

The Central bank said that Paytm's parent company, One97 Communications Ltd, which owns the Paytm brand, has enough liquidity to repay its entire deposit liability upon winding up of the bank.

Also Read: RBI Cancels Banking Licence Of Paytm Payments Bank; Will It Affect UPI Transactions?

According to the RBI, there was no useful purpose or public interest in allowing the Paytm Payments Bank to continue. It said the Paytm Payments Bank Limited is prohibited from conducting the business of 'banking' for failing to comply with the conditions stipulated in the payments bank licence issued to it. The licence was cancelled as the "affairs of the bank were conducted in a manner detrimental to the interest of the bank and its depositors, the RBI said in a statement.

"The general character of the management of the bank is prejudicial to the interest of depositors as also the public interest," it said. Consequently, Paytm Payments Bank is prohibited from conducting any "banking" business, it said.