Paytm founder Vijay Shekhar Sharma. Photo: Supplied

After pulling off the largest initial share sale ever in India, it has been a downhill ride for digital payments startup Paytm. The stock of its parent One97 Communications Ltd has slumped 71% since its market debut on November 18 last year.

Its latest round of woes started after the Reserve Bank of India barred its unit Paytm Payments Bank from accepting new customers last Friday. The central bank expressed “certain material supervisory concerns” and directed Paytm to appoint an audit firm to conduct a comprehensive audit of its information technology system.

There were media reports of Paytm sharing information with China-based identities and onboarding customers without proper customer documentation. However, Paytm founder Vijay Shekhar Sharma denied the reports of any data leaks and said they have complied with the Reserve Bank’s norms on data localization.

Paytm Payments Bank was incorporated in August 2016 and formally started its operations in May 2017. It supports various Paytm offerings such as insurance, digital payments and lending.

The central bank’s action and the subsequent hammering in the capital markets have made analysts skeptical. Macquarie Capital Securities (India) has reduced its price target to 450 rupees ($5.90) from 700 rupees.

Macquarie was among early analysts to predict the company’s market troubles. It had begun coverage of Paytm before its initial public offering with an underperform rating. The brokerage said Paytm’s business model lacked focus and direction and was a “cash guzzler.”

It set a price target of 1,200 rupees, nearly 44% lower than the issue price of 2,150 rupees.

Paytm is backed by several well-known investors, including Masayoshi Son’s SoftBank Group, Warren Buffett’s Berkshire Hathaway and Jack Ma’s Ant Group. During its stock market debut, Paytm was valued at 1.39 trillion rupees, but is now about 400 billion rupees.

Forbes magazine also claims Sharma is no longer a billionaire. His wealth now stands at $999 million, while it had peaked at $2.35 billion before the share market listing.

Also Read: India’s Paytm makes lackluster market debut