Shares of One97 Communications, which owns Paytm, fell over 6% in early trade on Monday, in an otherwise positive broader market, after the Enforcement Directorate (ED) on Saturday conducted raids at six premises of the fintech company in Bengaluru over alleged irregularities in instant app-based loans run by companies owned by Chinese nationals. However, the company has refuted any link with the merchants that are under the ED scanner in the Chinese loan app case.
“As a part of ongoing investigations on a specific set of merchants, the ED has sought information regarding such merchants to whom we provide payment processing solutions. It is hereby clarified that these merchants are independent entities, and none of them are our group entities. We are, and will continue to, fully cooperate with the authorities, and all the directive actions are being duly complied with,” Paytm said in an exchange filing on Sunday.
“It may be noted that ED has instructed us to freeze certain amounts from the Merchant IDs (MIDs) of a specific set of merchant entities (as mentioned by the ED in their press release). It may be further noted that none of the funds which have been instructed to be frozen belong to Paytm or any of our group companies,” it said.
The company issued the statement a day after the enforcement agency raided premises of online payment gateways such as Razorpay, Paytm and Cashfree in Bengaluru in connection with a money laundering case, which is part of an ongoing probe against some unauthorised loan apps allegedly run by Chinese companies.
The agency seized an amount of ₹17 crore in merchant IDs and bank accounts of entities controlled by Chinese persons under the provisions of the Prevention of Money Laundering Act (PMLA), 2002. The case is based on 18 FIRs registered by Cyber Crime Police Station, Bengaluru against numerous entities and persons in connection with their involvement in extortion and harassment of the public who had availed small amounts of loans through the mobile apps being run by those entities.
Reacting to the news, Paytm shares opened 3.79% lower at ₹700 against Friday’s closing price of ₹727.55 on the Bombay Stock Exchange (BSE). In the first hour of trade so far, the largecap stock declined as much as 6.37% to hit a low of ₹681.2. There was a spurt in volume trade as 0.86 lakh shares changed hands over the counter as compared to two-week average volume of 0.77 lakh stocks. The market capitalisation declined to around ₹46,000 crore. In comparision, the BSE Sensex was trading 357 points, or 0.61%, higher at 59,160 levels.
Paytm has been one of the worst performing initial public offerings (IPOs) in the last one year, which wiped off 68% of investors' wealth since listing. The stock made its market debut in November last year at an issue price of ₹2,150 after successfully raising ₹18,300 crore in the country’s second largest-ever IPO, after LIC of India. The stock hit its all-time high of ₹1,961.05 on its listing day on November 18, 2021, while it touched a record low of ₹511 on April 5, 2022.