Paytm was founded in 2010 by Vijay Shekhar Sharma under One97 Communications, Paytm is an Indian multinational financial technology company, that specializes in digital payments and financial services, based in Noida, India. Shares of Paytm have been witnessing a freefall on the stock market after the Reserve Bank of India (RBI) issued regulatory curbs on its banking arm, Paytm Payment Bank Limited on January 31, and asked to stop accepting deposits from February 29.
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Paytm Crisis – Causes For This Crisis
Paytm is known as the Father Of All Fintech Firms, Paytm’s crisis started after the Reserve Bank of India (RBI) took action against Paytm, On 31st January, RBI gave them an order not to accept deposits after 29th February. After this statement, One97 Communications shares started to freefalll in share market.
Why Paytm Share Prices Are Declining
The stock recovered briefly earlier last week after it rose 13%. But investors lost patience in the stock after senior RBI officials said the action on Paytm Payments Bank was taken due to persistent non-compliance. Shares of One 97 Communications Ltd were trading at Rs 420.25, down by 6.01%, at 2.15 PM.
Small investors who chose to ride the momentum in Paytm shares in the past have been regretting their investment call. Not just retail investors, mutual fund investors are also confused about the current fiasco. A report in the Economic Times reported that 11 lakh retail shareholders, 514 FIIs and 97 mutual fund schemes have invested in One 97 Communications Ltd.
In the December quarter, shareholding pattern shows that Mutual Fund ownership in Paytm rose from 2.79% to 4.99% quarter-on-quarter. FII holding also rose 280 bps to 63.72% while retail ownership went up 457 bps to 12.85%
So, overall Paytm shares are declining because RBI took major and crucial decision on Paytm’s deposit system. RBI said that Paytm should close their Paytm Payments Bank and Wallet system after 29th February.
Ashneer Grover Thoughts Over Paytm’s Down Fall
Ashneer Grover, Founder of BharatPe criticized the Reserve Bank Of India (RBI) for what he calls as “Punitive Action” against Paytm Payments Bank (PPBL).
In an interview with MirrorNow, Grover called the regulator’s action an “overreach”, adding that the message being sent is that “banks are (systemically) important, but fintech are not.
Over the last 10 to 12 years startups in India have emerged organically, and people in the government are eager to click pictures with founders but in terms of legislation there has been no move.
We have 111 unicorns but none of them is considered systemically important for the economy, but these startups have driven the 6-7.5 percent GDP growth rate that we celebrate. Due to this startup’s FDI (Foreign Direct Investment) have increased and number of unemployment has been gradually decreasing but see zero legislative support and as they become big you see these public problems,” he added.
Paytm ‘Father Of All Fintechs’ says Grover
Grover acknowledged Paytm’s pioneering role in India’s fintech landscape, stating that the company is the cornerstone for various fintech ventures, including BharatPe. He added that while he is the founder of BharatPe, the company does owe its existence to Paytm, stating: “Paytm is the father of all fintechs in India. If it didn’t exist, BharatPe wouldn’t have existed.”
“They (Paytm) introduced and built the behaviours of scanning a QR code to help money flow in India. The ecosystem was built after Google Pay, PhonePe came on the consumer side and BharatPe and Pine Labs came on the merchant side. So for the start-up community, this is sad,” he said, referring to the central bank’s actions.
Who is Ashneer Grover
Indian businessman Ashneer Grover is the former co-founder and managing director (MD) of the Indian fintech company BharatPe which he co-founded along with Shashvat Nakrani and Bhavik Koladiya in 2018. Grover also appeared as an investor on the reality TV show called ‘Shark Tank India.
Life And Education
Ashneer Grover was born on June 14, 1982, in Delhi. His father was a Chartered Accountant (CA) and his mother was a teacher. He completed his elementary education from the national capital and graduated in B Tech in civil engineering from the Indian Institute of Technology (IIT) Delhi.
For further studies, he went to INSA Lyon University in France for a student exchange program during 2002-2003 and then completed his MBA from Indian Institute of Management (IIM) Ahmedabad in 2006.
Career
Before establishing BharatPe, he worked in many firms including; Kotak Investment Bank, Grofers, PC Jeweller Ltd and American Express. Ashneer’s wife Madhuri Jain Grover, who is also an entrepreneur, served as the head of control at BharatPe since its incorporation and headed procurement and admin departments.
Ashneer Grover’s resignation as BharatPe MD
Ashneer Grover resigned as MD and from the board director after receiving the agenda for the upcoming Board meeting that included submission of the PWC report regarding his conduct and considering actions based on it. According to Bharatpe’s official statement, the board reserves the right to take action based on the report’s findings.
Grover resigned as MD and the company’s board director on February 28, 2022. The company said Grover tendered his resignation within minutes after the agenda for the board meeting on the PwC audit report was distributed.
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