Explained: Paytm fiasco impact on mutual fund investors

At least nineteen out of a total of 23 asset management companies (AMCs) do not include One97 Communication Ltd (Paytm) in their portfolios, and nine of these 19 AMCs have no exposure to Paytm through their active mutual funds, revealed data gathered by fintech startup Fisdom. 

As per the report, 19 AMCs with no exposure to Paytm are: 360 One, Axis, Bank of India, Baroda BNP Paribas, Canara Robeco, DSP, Invesco, ITI, LIC, NJ, PGIM, PPFAS, Quantum, Samco, Shriram, Sundaram, Taurus, Trust, Whiteoak.

The stock price of fintech giant Paytm has fallen 42 per cent in the last three days following RBI's diktat mandating Paytm Payments Bank to halt nearly all banking services from March 1, citing supervisory and non-compliance issues. 

On January 31, 2024, the Reserve Bank of India barred Paytm Payments Bank from accepting fresh deposits and making credit transactions after February 29, 2024. As per the directive, the payments bank account cannot accept deposits, credit transactions, and/or top ups in customer accounts, prepaid instruments, wallets, FASTags, and National Common Mobility Cards from March 2024.

 The mutual fund industry's collective exposure to One97 Communication Ltd (Paytm) stands at Rs 1,995 crore as of December 31, 2023, which is only 0.06 per cent of the total equity assets under management (AUM), said Fisdom Research in a recent note.

Among the asset management companies (AMCs) that had exposure to the stock, none exceeded 2% of their equity AUM in any case.

Equity Oriented funds with the highest allocation to One97 Communications Ltd. (Paytm)

Equity funds with the highest allocation to One97 Communications Ltd. (Paytm)  are Mirae Asset Large Cap Fund, Mirae Asset-Focused Fund, Quant Mid Cap Fund, Nippon India Large Cap Fund, Mirae Asset ELSS Tax Saver Fund.

Sectoral/Thematic funds with the highest allocation to One97 Communications Ltd. (Paytm)

AMCs With Exposures to One97 Communications Ltd. (Paytm)

Apart from these, Tata has 1.8 per cent exposure to Paytm while Zerodha AUM has 0.7 per cent.

Equity Oriented funds with the lowest allocation to One97 Communications Ltd. (Paytm)

AMCs  with no exposure to Paytm 

"Paytm faced a significant setback when the Reserve Bank of India (RBI) stepped in to enforce restrictions on its payment bank due to rule violations. This move is expected to negatively affect Paytm's operations, given its massive user base  of 50 million account holders and 300 million wallets, along with its leading position in the FASTag market. The impact may be seen in its lending business, which contributes around 18-20% to its total revenue, which may potentially affect its financial health and stock value," said Fisdom in a note.

Paytm shares may continue to tumble and face pressure till its compliance-related concerns are dealt with and its fundamentals show persistent improvement.