THE BELEAGUERED DECACORN

The story of Paytm, once described as one of the biggest start-up stories in India’s financial services sector, appears to have become a cautionary tale of everything that could go wrong after an IPO.

- M.G. Arun

Founded by Vijay Shekhar Sharma—who rose to prominence after demonetisation as the poster boy of digital payments—Paytm has struggled to live up to the massive expectations preceding its debut on the stock market just five months ago, in November 2021. It is currently facing a raft of problems, from an RBI-ordered audit of its IT (information technology) systems, a temporary ban on the ‘onboarding’ (registration) of new customers until this audit is completed, and a sustained, catastrophic fall in its share price. On March 21, shares of One97, Paytm’s parent company, were trading at Rs 565.35—an over 70 per cent drop in value from the issue price of Rs 2,150 just five months ago.

In a notice to the exchanges on March 12, Paytm said the RBI had noted “certain material supervisory concerns at Paytm Payments Bank”, and that the company was “taking immediate steps to comply with RBI directions, including the appointment of a reputed external auditor to conduct a comprehensive audit of [the firm’s] IT systems”. It also stressed that the RBI’s ban on registering new customers would not impact services for existing customers. Per media reports, Paytm Payments Bank (PPB) has 58 million account holders and 300 million mobile wallets.