Paytm pains far from over, but Sandeep Tandon of Quant MF sees digital banking new reality

An “unknown risk” has hit Paytm, says Sandeep Tandon of Quant MF, that has set the stock on a sustained downturn, sending it to the 5 percent lower circuit on February 15 and eroding its market capitalisation by 55 percent since the Reserve Bank of India slapped strict restrictions on Paytm Payments Bank.

“Looking at Paytm as a concept, I don’t find too many problems at the current levels. But there is a regulatory risk,” Tandon told CNBC-TV18 in an interview.

According to the veteran investor, since the Paytm stock is grossly over-owned by private equity who are exiting at every level, it leads to increased selling pressure on the stock.

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In this whole space of digital payments, Tandon likes payment gateway or digibank as a concept as he believes that digital banking will be the new reality. Quant MF did not participate in the Paytm IPO. However, a few months back they bought and exited as well, the investor said in the interview.

On January 31, the RBI placed restrictions on Paytm Payments Bank Ltd (PPB), an associate company of One97 Communications, saying the actions were warranted by “persistent non-compliances and continued material supervisory concerns” in the bank. The regulator found major irregularities in KYC, which exposed the customers, depositors, and wallet holders to serious risks.

In its probe, the regulator found that in thousands of cases, the same PAN was linked to more than 100 customers and, in some cases, the number went above 1,000. The total value of transactions, running into crores of rupees, is much beyond the regulatory limits in minimum KYC pre-paid instruments, raising money-laundering concerns.

The embattled PPBL has recently told Moneycontrol that withdrawals of depositors’ money is being handled smoothly and in keeping with the regulatory requirements.

Also Read | Paytm Payments Bank says withdrawals smooth, meeting all regulatory requirements

Responding to a query, a spokesperson of the banking arm of payments major Paytm said on February 15 the withdrawal or utilisation of customer deposits was being handled under the required regulations.

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