Paytm shares fall after hitting upper circuit for fours sessions | India Business News – Times of India

Shares of One97 Communications, the parent company of the Paytm brand, are down about 2% on Thursday.
Paytm shares had witnessed a significant uptick, hitting the upper circuit for the fourth consecutive session on Wednesday. The stock prices soared by 5 per cent to Rs 395.25 and Rs 395.05 on the BSE and NSE, respectively, defying the broader market trends.
This surge comes in the backdrop of the fintech giant‘s recovery from a recent slump, with the Paytm stock rebounding more than 21 per cent from last Thursday’s close.
The bounce-back aligns with reports that the Directorate of Enforcement (ED) has not found significant violations of foreign exchange rules in its ongoing investigation into Paytm Payments Bank Ltd (PPBL), although it noted lapses in the company’s KYC processes and reporting of suspicious transactions.
The scrutiny on Paytm has intensified as the Reserve Bank of India (RBI) ramps up its oversight on fintech firms, reflecting a global trend towards tighter regulation of the sector. Recent actions by the RBI include a directive to halt certain operations of PPBL due to non-compliance issues, affecting One97 Communications despite it holding only a 49 per cent stake in the banking entity.
The RBI’s stringent stance follows a period of relatively lenient regulation, but as fintech firms gain economic significance, concerns over customer due diligence, data privacy, and systemic risks have prompted a reevaluation of oversight mechanisms. The central bank’s discomfort primarily lies with digital customer identification practices, urging firms to classify digitally verified accounts as ‘high risk’ pending more secure verification methods.
In response to these regulatory challenges, the RBI has increased the frequency of inspections and meetings with fintech companies, moving from quarterly to monthly engagements. These steps, coupled with investments in technology and analytical talent, aim to tighten compliance and ensure the integrity of the financial ecosystem.
The evolving regulatory landscape signals a potential shift towards higher compliance and capital requirements for fintech firms, possibly leading to sector consolidation. Yet, industry stakeholders like Ashish Fafadia of Blume Ventures believe this scrutiny will foster compliance and support investment in law-abiding companies.
Amid these developments, the Indian finance ministry plans to convene with domestic fintech startups next week. The goal is to reinforce the importance of regulatory adherence while addressing industry concerns, particularly in the wake of the Paytm Payments Bank crisis and ensuing actions against other fintech operations.
The sector’s ongoing adaptation to these regulatory demands highlights the delicate balance between innovation, customer protection, and systemic stability, setting the stage for the next phase of fintech evolution in India.
(With inputs from agencies)