One STUPID Mistake that DESTROYED PayTM

Namaskar friends, if you remember, in 2017, Paytm's CEO and founder Vijay Shekhar Sharma went viral. In a lot of excitement, they were celebrating the success of Paytm. They famously said, those who are not with us, will cry. But sadly, 7 years later, the situation has completely changed. Those who are with Paytm are crying. In the last few days, we have seen a horrific crash of this company. 

On 30th January, the stock price of this company was at Rs. 760. Today, it has fallen below Rs. 380. What is the reason behind this? Let's understand the rise and downfall of Paytm.

Paytm was started in 2010, but initially it was just a mobile recharging platform. An app through which you used to recharge your phone and pay landline. The company slowly added more features to its app. It was only in January 2014 that Paytm Wallet was launched, through which you could pay online using Paytm. By 2015, it was possible to pay for Metro's recharges, electricity, gas and water bills. But the real jump in the company's popularity was only seen after 8 November 2016. That day when demonetization. The very next day after demonetization, many front page ads were published in many newspapers across the country. decision in the financial history of independent India. The next day, on 9th November, the front page of the newspaper published this ad. Did this company already know that demonetization was going to happen? Whatever happened, one thing was clear. Paytm benefited a lot from this decision. According to Euro Money's report, before demonetization, Paytm had 125 million customers. But only after 3 months of note-blocking, Paytm's customers had reached 185 million. and One was Paytm's Chinese link. In 2015, a Chinese company named Alibaba invested $680 million in Paytm and 40% stake of Paytm company went into the hands of this Chinese company. Alibaba's founder is Jack Ma and Vijay had also told him about his hero. He had given a statement to Financial Times newspaper. You must be aware of the recent relations between India and China. China is being intruded into the Indian border again and again. In 2017, Doklam border was put on standoff. Many people had criticized the PTM for this. That this company becomes a patriot when people want to sell something. 

But they have been taking Chinese funding from behind. Because of this criticism, the Chinese company has around 13.5% stake as of now. In May 2018, the next controversy arose regarding Paytm when the investigative news agency Cobra Post conducted an undercover operation. Their undercover reporter went to meet the Vice President of Paytm, Ajay Shekhar Sharma, who is Vijay Shekhar Sharma's brother. And when he was asked if he would spread the propaganda of our political party through his app, he happily accepted. There are many things, I will give you the material. No, we will do all that if RSS will go from here. Because RSS is in our blood. He also said that when the government asked us for the data of some Paytm users in J&K, the stone pelting that was happening, we happily gave it to the government. The building in JK, the stone building, the stone building, we were personally called by the PM to give us the data. Maybe we can get the meeting. I made a video on this 6 years ago, if you remember, if you are such an old viewer of my channel. But nothing more happened than these controversies. The company kept growing very fast. Generally speaking, there are many companies who don't care about your data. They sell your data to other companies. 

In 2017, Paytm launched Paytm Payments Bank. They started offering banking services. Payments Bank is like a bank in a way. You can create a bank account, deposit money, take a debit card. But there are some important differences compared to a normal commercial bank. Payments banks mostly focus on digital services. There are very few physical branches of payments banks. And according to the rules of RBI, payments banks cannot offer credit card and loan services. Normal commercial banks like HDFC, SBI, ICICI, do not have any deposit limit. You can deposit as much money as you want in those banks. But there is a limit in payments banks by RBI. You cannot deposit more than Rs. 2 lakhs in these banks. I am telling you all this in detail because the current state of Paytm is due to a major reason, Paytm's payments bank. RBI means Reserve Bank of India. It is the central bank of the country. It decides the monetary policy of the country and also works to print money. All the banks and financial institutions in the country have to follow the rules and guidelines made by the RBI. So on 31st January 2024, the crash of Paytm happened because the RBI imposed operational restrictions on Paytm's Payments Bank. The RBI said that Paytm's Payments Bank kept violating our rules. They were seen as persistent non-compliance. And that's why we are now putting a stop to this bank. After 29th February 2024, Paytm's Payments Bank can't accept any new deposits. Money can't be topped up in customer accounts. New customers can't be on-boarded. And RBI said that all the nodal accounts on Paytm Payments Bank should be closed by 15th March 2024. Nodal accounts are those accounts which are used by e-commerce and online services businesses. And as far as Paytm Wallet is concerned, you can use your existing balance but after 29th February, no one can deposit any more money in it. So, obviously, this is a very, very big decision by RBI. And such a decision is not taken in a jiffy. It's not that one day RBI thought that today we will start Paytm class and take all these decisions. In fact, there is a very long history behind it. The truth is that Paytm was being warned by the RBI for years, but it still didn't change. In November 2017, Paytm's Payments Bank was launched and in June 2018, the first warning came from the RBI. An audit found that Paytm was not following the anti-money laundering regulations properly. 

And the customers who made their accounts on their bank, their identity was not being seen by Paytm. So RBI said that Paytm should stop onboarding new customers until it fixes all these issues. Paytm took some action regarding this warning because on January 2019, RBI said that Paytm can start onboarding customers again. The restrictions were removed. But after 2.5 years, in October 2021, the next big shock comes. A fine of 1 crore is imposed on Paytm. Because while filling their license application, they filled in wrong information and gave wrong documents. RBI says that the same things about which we had given you a warning earlier, customers are not being verified properly, regulations are not being followed properly, the same things are being seen again. Once again, a stop is imposed on customer onboarding. In October 2023, another big fine is imposed on Paytm for 5 crore rupees. RBI was hoping that after 2 warnings and 2 fines, Paytm would meet the regulatory requirements and start verifying its customers. But even after this, Paytm did not take these things seriously. And for this reason, on 31st January 2024, RBI said that this is too much. If rules and regulations cannot be followed properly, then stop it. The things that RBI got here were very shocking. According to CNBC, Paytm allowed lakhs of customers to open accounts in their banks without KYC. There were thousands of cases where thousands of customers opened different accounts using the same PAN card. In some accounts, transactions worth crores of rupees. Here, the potential risk of money laundering was also seen. It is possible that money laundering is being done through Paytm. Outlook reported that, according to an analyst, Paytm has around 35 crore wallets. Of which, around 31 crore wallets are inactive. None are being used. And the remaining 4 crore wallets, most of them have no balance or very little balance. Because of this, they can be used like mule accounts. Mule account is an account used for illegal activities like money laundering. After this, the concern of data privacy also came up. RBI said that the parent company of Paytm, 197 Communications Ltd and Paytm Payments Bank have no operational segregation. The flow of money between the two has been seen which was not disclosed in the financial statements. So many rules and regulations were ignored. Is the arrogance of their CEO Vijay Shekhar Sharma responsible here? Because many interviews he has done with media channels this is what he said in his talks. We make profit, so it is. Somebody who's not met us and have an opinion on us is not my opinion to keep an opinion on that. After RBI's 31st January announcement, a commotion broke out. People started taking out the money they had invested in Paytm. So, Paytm's stock crashed very fast. To calm people down, Paytm posted on its social media handles many times that nothing has gone wrong here. On 2nd February, Vijay Shekhar Sharma also tweeted this. As you can see, once again, the support of patriotism was taken. We are not a company here, we are serving the country. Again and again, the name of India was taken and the Paytm by mentioning India's name. I remember a saying from this. Patriotism is the last refuge of a scoundrel. You must have heard this quote. In my opinion, we should be wary of such companies which take the support of patriotism to the max. A few years ago, Freedom 251 called. It is India's flag on the back of the phone. It was sold as the world's cheapest phone but it turned out to be a big scam.

 If a company's products and services have value in themselves, they sell those things in the name of that value. But if they don't have much to say about their products or services, then it happens that patriotism is taken as a support. Buy our product because we are Indian. We are an Indian company, that's why you should buy our product. Anyways, coming back to Paytm, the question is what will happen next? Internally, the employees in the company are facing a lot of uncertainty. They are not getting much clarity from the leadership about what will happen next. Economic Times reported that one of the executives of the company told them that our business model will change. 

Now instead of being a bank, we will become a third party payments app. So we will have to change a few things on the back end. And we will have to do this change in a very limited time. If you look at the annual report of Paytm, how much money this company has earned year by year, you will see that it has always been a loss-making company since it was listed on the stock market. Look at this chart, in 2021, their company had a loss of Rs. 1,600 crore. In 2022, a loss of Rs. 1,500 crore. In 2023, a loss of Rs. 170 crore. the company was taking losses were decreasing. So, it could have been expected that next year, that is, in 2024, the company would earn its first profit. But now, seeing what has happened, it seems difficult. The company expects that this year, the company's loss could be 300-500 crores. The Paytm itself revealed this to the public, saying that it would comply with the RBI guidelines. But after this announcement, the company's stock price fell further. the company's stock price fell further.