Paytm shares plunged 20% for a second day, continuing a slump triggered by India’s central bank banning much of its business.

Regulatory troubles for the digital payments giant are mounting after the Reserve Bank of India (RBI) ordered its unit Paytm Payments Bank Ltd to stop many of its activities, citing persistent non-compliance and supervisory concerns. A conference call held after market hours on Thursday failed to inspire investor confidence. At least five brokerages, including JPMorgan Chase & Co and Citigroup Inc, downgraded the stock to "sell".

The two-day decline has erased over US$2 billion  in market value in the company that counts Alibaba’s Antfin Singapore Holding Pte Ltd and SoftBank Group Corp among its investors.

“The order materially impacts Paytm’s core payments business at 59% of revenue,” JPMorgan analysts including Ankur Rudra wrote in a note. While this is likely to have less impact on its other businesses, it dilutes the network effects of Paytm’s “merchant-consumer” ecosystem and brand credibility over time, unless the company can successfully migrate its business to other banks, they said.

Paytm is now down about 77% from its initial public offering in 2021. The company said in the recent conference call that operations should be back to “fully normal” by early March, and it is accelerating plans to partner with other banks.

  - Bloomberg