Paytm shares nosedived 13 percent Monday after Indian regulators banned the beleaguered payments platform from enrolling new customers and reports its founder was arrested for crashing into a police car.
The firm enjoyed India’s biggest-ever initial public offering four months ago, with the backing of 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 a commanding position in the local digital payments space, as investors fret over whether the perennial loss-maker will ever turn a profit.
India’s central bank demanded Paytm immediately stop enrolling new customers on Friday and ordered an audit of its IT systems, citing “certain material supervisory concerns observed in the bank”.
Shares in the firm hit record lows as the day’s trade began before recovering slightly to be 11 percent down near the close.
Paytm said it “remains committed to working with the regulator to address their concerns as quickly as possible”.
The firm’s woes were compounded over the weekend after news broke that founder and chief executive Vijay Shekhar Sharma had been briefly detained after crashing into a senior police officer’s car in the capital New Delhi and fleeing the scene.
Paytm downplayed the incident in a Sunday statement that characterized the accident as a “minor offense”.
Sharma, once named India’s youngest billionaire, launched Paytm in 2010 and quickly made the platform synonymous with digital payments in a country traditionally dominated by cash transactions.
His enterprise has benefited from government efforts to curb the use of hard currency — including the demonetization of nearly all banknotes in circulation five years ago — and from the pandemic.
The platform had 350 million customers at the end of December, according to the company’s regulatory filing.
But the last few months have seen a dramatic reversal of fortunes for the platform and Sharma has seen his net worth written down by over $1.5 billion since its November 2021 market debut.
Paytm’s parent One97 Communications reported a net loss of 7.79 billion rupees ($102 million) for the December quarter.