Paytm shares fell nearly 13 percent on Monday after Indian regulators banned the payment platform from registering new customers and arrested its founder for colliding with a police car.
The company had the largest initial public offering in India four months ago, backed by Chinese tycoon Jack Ma’s Ant Group and Warren Buffett’s Berkshire Hathaway.
But it has since lost more than two-thirds of its market cap despite its leading position in the local digital payments space, as investors are worried about whether permanent losses will make a profit.
The Indian central bank asked Paytm to immediately stop registering new customers on Friday and ordered an audit of its computer systems, citing “some oversight concerns seen at the bank”.
Shares of the company closed 12.84 per cent lower in Mumbai after a record high on Monday.
Paytm said it “remains committed to working with the regulator to resolve their concerns as soon as possible.”
The company’s problems were exacerbated over the weekend by Vijay Shekhar Sharma, founder and CEO of Vijay Shekhar Sharma, who was briefly arrested last month after colliding with and fleeing a police car in New Delhi’s capital.
Paytm described the incident as a “minor offense” that was underestimated in a statement on Sunday.
Mr. Sharma, named the youngest millionaire in India in 2017, launched Paytm in 2010 and quickly made the platform a digital payment synonymous in a country traditionally dominated by cash transactions.
His company has benefited from the government’s efforts to reduce the use of hard money – including the demobilization of almost all banknotes in circulation five years ago – and the pandemic.
The platform had 350 million customers at the end of December, according to the company’s regulatory dossier.
But there has been a huge upheaval of wealth for the platform in recent months and Sharma has reduced its net worth by more than $ 1.5 billion since its launch in November 2021.
Paytm’s parent company One97 Communications reported a net loss of Rs 7,790 billion ($ 102 million) in the December quarter.
(This story was not edited by NDTV staff and was automatically created from a union feed.)