What’s poppin’ — India’s top banking regulators last night dropped a bomb on the boys and gals running shop at PayTM, by stopping PayTM Payments Bank from onboarding any new customers until it’s technology is thoroughly audited.
Fact is, bunch of other hotshots like HDFC, American Express and Mastercard have previously received similar punishment from the regulator for slippery systems or lax guardrails.
But we ain’t sure what to make of things when a supposedly modern era “digital” company gets the same bill, but hey it’s 2022 and nothing’s a surprise no more! There’s little clarity on what’s forcing the regulators’ hand — other than standard legalese comments that the ban comes based on "material" supervisory concerns.
Worth mentioning — Payments banks are basically a type of a lite-bank created by the RBI, 5 or so years ago, to allow modern fintechs to easily offer savings accounts, digital wallets, debit cards, and such, but without the ability to offer loans or process credit.
Anyway, PayTM has ~100 million KYC’ed users using products powered by it’s Payments Bank services, and while regulators haven’t stopped it from servicing those users, we could see serious market share losses if growth engines have to be slowed down.
Bottomline — if there isn’t more clarity soon, an increasingly anxious investor base could possibly bury the stock even more.