The share price of One 97 Communications, the parent company of Paytm, tanked 12 percent to ₹ 685 a share, down about 70% from its issue price of ₹ 2,150 per share.
On Friday, the Reserve Bank of India (RBI) directed Paytm Payments Bank to stop taking on new customers with immediate effect, citing "material supervisory concerns observed in the bank."
The Paytm Payments Bank has also been directed to appoint an audit firm to conduct a comprehensive audit of its IT system, the RBI said in a statement.
Paytm made its debut in November last year in the country's biggest-ever initial public offering. But the listing was also one of the worst witnessed by the Indian stock market. Including Monday's losses, Paytm shares have fallen nearly 70 per cent since their debut.
Indeed, Paytm has witnessed an erosion of over ₹ 57,100 crore to ₹ 44,294 crore from from Day 1's closing market capitalisation of ₹ 1,01,399.72 crore on November 18. About 70 per cent of its value has been wiped out do far compared to the initial public offering, at which the issue price sought a valuation of about ₹ 1.39 lakh crore.
Analysts at ICICI Securities told news agency Reuters, the digital payments startup would have to increase its efforts to enhance engagement with the existing user base to offset any adverse impact of the embargo on new users.
The research firm said that it might defer the company's plan to apply for a conversion into a small finance bank. Reuters reported, analysts at Macquarie Research expect a significant impact on Paytm's brand and customer loyalty. They said the recent developments would substantially lower the chance of Paytm Payments Bank of upgrading to a small finance bank.