Paytm shares hit lower circuit for second straight day after circuit revision, ED probe

Shares of online payments platform Paytm's parent One 97 Communications tanked 5% in intraday trade on Thursday to hit lower circuit for the second day in a row. The sharp drop in the share price comes a day after the stock exchanges revised the circuit limits to 5% from 10% earlier amid the ongoing Enforcement Directorate probe over an alleged Foreign Exchange Management Act (FEMA) violation.

At 2:30 PM, One 97 Communications Ltd shares traded 5% lower at ₹325.05 apiece at 2:45 pm on NSE.

Paytm stocks closed Wednesday's trade at ₹342.35 per share after hitting a lower circuit of 10%.

The stock exchanges previously reduced the circuit limit for the Paytm shares to 10% from 20% after volatility on the counter in the wake of Reserve Bank of India (RBI) restrictions on the Paytm Payments Bank.

The stock exchanges usually revise circuit limits based on the Last Traded Price (LTP) of the stock. In instances where a particular stock tumbles drastically, exchanges lower their circuit limits.

Paytm shares have hit lower circuit multiple times since the Reserve Bank of India's crackdown on Paytm Payment Bank over alleged irregularities.

The fintech stock has fallen over 57% since the RBI’s action on the company’s Paytm Payment Bank in January.
The RBI, on January 31, 2024, barred Paytm Payments Bank from accepting deposits or top-ups in customer accounts, wallets, FAST Tags and other instruments after 29 February on account of large-scale non-compliance with regulations and supervisory concerns.

Paytm's Founder-CEO Vijay Shekhar Sharma had said the company was in discussions with the RBI to address the regulatory concerns. However, the central bank has ruled out the possibility of any review of the action. One97 Communications, which operates the Paytm Payments Bank, has received notices from various government probe agencies including ED for information concerning customers of the respective entities.

"One 97 Communications Limited (OCL), its subsidiaries and its associate, Paytm Payments Bank Limited, have over time been receiving notices and requisition for information, documents and explanations from the authorities, including Enforcement Directorate (ED), with respect to the customers that may have done business with the respective entities, and provided the required information, documents and explanations to the authorities," Paytm said in a regulatory filing. Paytm added that the company and its associates have continued to provide information, documents and explanations to the authorities as required by them.