NSE and BSE curb Paytm daily trading limits to 10% after stock rout

India's digital payments giant, Paytm, is facing a double whammy after the Reserve Bank of India (RBI) imposed restrictions on its banking arm and stock exchanges slashed its daily trading limit. These developments have eroded Paytm's market value by a staggering $2 billion, dropping it to a mere $3.7 billion.

The RBI's crackdown targeted Paytm Payments Bank (PPBL), directing it to halt new deposits and wallet top-ups from March onwards. This stringent action stems from concerns over money laundering and non-compliance with KYC regulations. This is a significant blow to Paytm, as its core operations rely heavily on its banking services.

Adding to the company's woes, both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) have reduced the daily trading limit for Paytm shares to 10%, a sharp dip from the previous 20%. This decision follows a dramatic 40% plunge in Paytm's stock price over two days, touching its lowest permissible limit on the BSE.

While existing customers can utilize their current deposits and wallet funds till the end of February, the future remains uncertain. Without a change in the RBI's stance, wallet top-ups and related transactions will be discontinued, potentially impacting millions of users.

The allegations against PPBL involve maintaining numerous accounts without proper KYC compliance and linking multiple accounts to single PANs, raising concerns about potential misuse and money laundering.

These developments paint a concerning picture for Paytm's future. The company must address the RBI's concerns and regain investor confidence, all while navigating the limitations imposed by the reduced trading limit. The coming weeks will be crucial for Paytm as it strives to weather this storm and rebuild its footing in the Indian digital payments space.