The Rise and Fall of Paytm | Between the Lines with Palki Sharma

tonight we'll talk about PTM if you're in India I'm sure you've heard of it and most of you may have also used it but do you know what it means PTM is an acronym the full form is pay through mobile paytm it pioneered India's digital payment system it was synonymous with paying by phone the tagline is PTM Karo ptmo almost like a slogan that's how popular this company became India's most celebrated unicorn a mammoth fintech giant but not any more PTM is off to a rough start in 2024 its payments bank has been given the death sentence it came from India Central Bank The Reserve Bank of India it has barred PTM from banking activities no transactions no wallet topups nothing and it has left many asking what happened what is the PM Story how did this company grow so big and why did it fall hello and welcome I'm py Sharma and this is between the lines [Music] this man is the founder of patm his name is Vijay shakar Sharma once India's youngest billionaire although he had truly humble beginnings this is a rags to riches story sharma's Early Education was in a government school he says he could not speak in English till the age of 15 now if you're in India it can be an impediment to growth so Vijay Shar Sharma says that he taught himself he went to the Delhi Technological University after graduation he could have taken a 10 to five job but he chose not to he set up something called indias site.net it clicked he sold it for $1 million then he rode the.com wave that too was a success in the year 2000 he took a loan of 8 lakh rupees around $99,000 to set up a company called 197 Communications that's the parent company of PTM now initially 197 Communications offered digital goods and services it was doing well but not well enough for its founder he wanted more in 2010 he launched PTM with an initial investment of $2 million Sharma wanted to disrupt the market to get everyone to pay by phone PM started off as a prepaid mobile and dth recharge platform in 2013 expanded adding debit card and post-paid mobile payments the big breakthrough came one year later in 2014 PTM introduced the wallet system it was an instant hit Indian railways and Uber added it as a payment option you could pay your electricity bill your Metro card fees and your water bill through this one wallet it was revolutionary the user base grew rapidly in 2014 they had around 11 million users by 2015 around 100 million so it was gaining popularity and how but cash was still King in India in 2016 that changed India demonetized 51,000 Rupee notes people were left with no option really they turned to digital payments and PM made the most of it demonetization made it a household name and necessity digital payments surged and with this surge PTM grew bigger by 2017 it was a giant the first payment app with over 100 million downloads millions of merchants signed up for it they became PM clients they were issued QR codes these codes were linked to their bank accounts you could scan the QR and pay no haggling for cash no waiting for change it was simple and a GameChanger more and more people signed up your auto drivers your repair shops every business small and big was coming on board by 2021 patm had 150 million active users every month the company processed 1.2 billion transactions it continued expanding adding other services like tickets for movies or flights selling gold Insurance even remittances patm was doing everything its investors were happy we're talking about Alibaba the ant group and soft bank they were the top investors in PM they decided to take the company public and in November 2021 patm launched its IPO in India IPO is initial public offering when you offer shares in your company to public and this was the biggest IPO in India's history then PM raised about 18,300 CR rupees that's around $2.3 billion at the valuation of 20 billion US it's like the company had a Midas Touch everything it touched turned to gold as if nothing could go wrong yet everything did when trading began in 2021 PM's IPO share price was 2,150 rupees that's the price of one share that was offered on November 18 PM was listed on the Bombay Stock Exchange the share started trading at around 1,950 rupees so it was already lower by 9% by noon it was trading at 1,800 Rupees at the closing bell it was at 1560 rupees so it closed at almost 27% less than the initial offering it was almost like a crash 40,000 CR rupees of investor wealth was wiped out in a day 40,000 crores it's more than the market cap of several big companies the IPO was a huge failure it was also the start of PM's unraveling the company was called a cash guzzler experts and investors were concerned they were worried about lack of Direction They questioned its scale they questioned the profitability doubts started creeping in which brings us to the latest Saga the Crux of the problem was the PTM payments Bank a subsidiary of PTM it came into existence in 2017 the same year it got a banking license and within months it faced its first hurdle the bank got a regulatory strike it was accused of multiple violations non-compliance of kyc guidelines that's a mandatory process of verifying client identity kyc know your customer plus day and balances were breached so in June 2018 the RBI cracked down it halted the opening of new accounts patri responded a compliance report was submitted and by the end of that year the ban was lifted in 2021 things unraveled further RBI hit PTM with a fine of 1 CR rupees they said the bank had submitted false information and the troubles did not end there by the end of 2021 RBI found more violations lapses in technology cyber security concerns moneya laundering accusations and no separation between the bank and the group's other entities so the RBI issued a directive it told patm to stop on boarding new customers it also called for an audit by an external firm that audit happened but the RBI was still not happy they said patm was not serious about making amends and they weren't taking corrective measures so in October 2023 the RBI slapped another fine this time the penalty was worth 5.3 crores so six years multiple warnings and two fines but the company did not fix the problems by 2024 the RBI had enough the violations were so serious they could no longer ignore them several accounts lacked kyc know your customer regulations it's mandatory for all banks in some cases one identity proof was linked to thousands of accounts there were concerns about fraud corruption and money laundering in some of these accounts transactions ran up to crores this was above the regulatory limit yet all of it was being allowed so the RBI issued its latest ultimatum the deadline is February 29th after that PTM is banned from all banking activities which leaves the company with two big challenges securing its customers and its lending Partners PTM users especially its 40 million Merchants are migrating to other platforms and the lending Partners want nothing to do with PTM the RBI ban has made PTM Untouchable it's a cautionary tale of how Giants bite the dust patm grew because it was on top of the Curve easy to use and offered opportunities for everyone it was like we said revolutionary but it made one big mistake it took the rule book for granted and that proved to be its undoing I guess that's the lesson here the law catches up no matter how big you [Music] are

Channel: Firstpost

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Id: 5C9pec48i4Y

Length: 9min 19sec (559 seconds)

Published: Sun Feb 11 2024