Macquarie has maintained an 'underperform' rating on Paytm parent One97 Communications after the RBI restricted the company's payments bank - Paytm Payments Bank - from opening new accounts. The brokerage also retained its target price for Paytm, at Rs 700.

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On Friday, the RBI said it observed "material supervisory concerns" in the payments bank. This is the third time that Paytm Payments Bank is facing action from the regulator since its inception in May 2017. Paytm Payments Bank has been prohibited from opening new accounts for the second time.

Paytm Payments Bank said it is taking immediate actions to comply with the RBI's direction. In a blog post, Paytm Payments Bank said its existing customers can continue to operate banking and digital payments services without interruption.

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Macquarie does not expect a substantial impact of the RBI's measures on Paytm's business. The company has already onboarded a very large number of customers on the payments bank, according to the brokerage.

It, however, expects a significant impact on the brand and customer loyalty for Paytm.

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The RBI directed the payments bank to appoint an IT audit firm to conduct a comprehensive system audit of its IT system. Any onboarding of new customers by Paytm Payments Bank will be subject to specific permission by the RBI, based on its review of the auditors' report.

Incorporated in August 2016, Paytm Payments Bank began its operations in May 2017.

In 2018, the RBI had prohibited Paytm Payments Bank from onboarding new customers citing supervisory concerns. Those restrictions were lifted on December 31, 2018.

Paytm shares fell as much as 13.3 percent to an all-time low of Rs 672.1 on BSE, a discount of 68.7 percent below its issue price of Rs 2,150. Prior to Monday's fall, the stock had hit an all-time low of Rs 728.5 on March 8.

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First Published:Mar 14, 2022 10:11 AM IST