Paytm Shares Plunge After RBI Revokes Payments Bank License
Analysts scrutinize market data after a regulatory decision.
Key Highlights
Paytm’s stock experienced a significant drop following the Reserve Bank of India’s decision to revoke the license of Paytm Payments Bank.
Shares of the fintech company Paytm experienced a sharp decline, falling as much as 8.37% during intraday trading to a low of ₹1,051.05, after the Reserve Bank of India (RBI) cancelled the license of Paytm Payments Bank.
The stock later recovered partially, trading 3.78% lower at ₹1,103.75 as of 10:44 IST, with the company’s market capitalization standing at ₹70,552.8 Cr (approximately $7.4 Bn).
Despite the RBI’s action, several brokerages have maintained a positive outlook on Paytm. Analysts suggest that the development will have a limited direct financial impact on the listed entity, as the payments bank business had already been ring-fenced and written off previously.
Bernstein has upheld an ‘Outperform’ rating with a target price of ₹1,500, viewing the license revocation as a negative but stating that there would be no material financial impact since Paytm had already written off its investment. The firm also suggested that this move could potentially pave the way for Paytm to apply for an NBFC or PPI license in the future.
Jefferies has also retained its ‘Buy’ rating with a target price of ₹1,350, noting that the formal cancellation does not affect operations, as the wallet business was already shut down, UPI handles were transferred, and major agreements had been terminated. All of Paytm’s services continue to operate.
Goldman Sachs has kept its ‘Buy’ call on Paytm but reduced the target price from ₹1,470 to ₹1,400, citing the license cancellation as an incremental negative. However, it sees no direct financial impact because Paytm Payments Bank was already ring-fenced, with customer and merchant sentiment remaining the key risk.
On Friday, the central bank cancelled the banking license issued to Paytm Payments Bank Limited under Section 22(4) of the Banking Regulation Act, 1949, with immediate effect.
The RBI stated in its circular that Paytm Payments Bank Limited is now prohibited from conducting the business of banking as defined in Section 5(b) or any additional business specified under Section 6 of the Banking Regulation Act, 1949.
This means the bank can no longer conduct any banking activities, and the RBI will move the High Court to begin winding up proceedings. The central bank has assured that the bank has sufficient liquidity to repay all depositors during this process.
The RBI cited multiple reasons for its decision, stating that the bank’s affairs were being managed in a manner detrimental to the interests of both the institution and its depositors. It also raised concerns regarding management and governance, asserting that the bank’s overall functioning was against the public interest.
The central bank added that allowing the bank to continue operations would not serve any meaningful public purpose and noted that the company had failed to comply with the conditions attached to its payments bank license.
This action follows the RBI’s earlier restrictions in 2024, which had already rendered Paytm Payments Bank largely inactive. After being barred from onboarding new customers in 2022 and from accepting fresh deposits in 2024, Paytm secured the TPAP license from the National Payments Corporation of India in March 2024. Its subsidiary, Paytm Payments Services Ltd, later received a payment aggregator license for offline and cross-border payments.
In terms of financial performance, Paytm reported a net profit of ₹225 Cr in Q3 FY26, compared to a net loss of ₹208 Cr in the same quarter the previous year, with revenue increasing 20% year-over-year to ₹2,194 Cr. stood at ₹156 Cr with a 7% margin, against a loss in the year-ago period. The company has yet to disclose its financial results for Q4 FY26.