Shares of One97 Communications, which owns and operates digital payments company Paytm, tumbled 1% in Friday's (October 13) opening trade, after the Reserve Bank of India (RBI) imposed a monetary penalty of Rs 5.39 crore on Paytm Payments Bank for violating Know Your Customer (KYC) norms.

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The scrip continued its upward trajectory, hitting a fresh 52-week high on Thursday, before giving up some gains and settling 1.81% lower at Rs 954.15 apiece on the NSE. Paytm shares have gained 79% since the beginning of this year, outperforming benchmark Nifty 50, which has risen 8% during this period.

Brokerages continue to remain bullish on the Paytm stock. Domestic brokerage firms Motilal Oswal Securities and Yes Securities have raised Paytm's target price to Rs 1,025, while global brokerage Bernstein added the stock to its India portfolio on expectations of healthy September quarter earnings. Paytm is slated to announce its Q2 results on October 20.

Meanwhile, the central bank has imposed a fine on Paytm Payments Bank for non-compliance with certain provisions of the RBI's KYC directions.

The payments bank failed to adhere to certain provisions of the licensing guidelines, delayed in reporting of unusual cyber security incidents, and failed to secure mobile banking applications including UPI ecosystem, the regulator said Thursday.

The RBI said its action was based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. A notice was earlier issued to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the said directions.

The central bank said that the payments bank failed to identify beneficial owner in respect of entities onboarded by it for providing payout services. Also, the apex bank suggested that Paytm Payments Bank didn't monitor payout transactions and carry out risk profiling of entities availing payout services.

Besides, the RBI suggested that Paytm Payments Bank's V-CIP infrastructure failed to prevent connections from IP addresses outside India.

"Our associate PPBL has the highest regards for the extant RBI regulatory framework and is taking steps to ensure complete adherence to the supervisory instructions issued in this regard. PPBL is also currently in the process of adhering to other instructions of RBI," Paytm informed the stock exchanges overnight.

First Published:Oct 13, 2023 9:01 AM IST