The report stated that the company would soon face assessment proceedings from the income tax department.In response to a media report indicating that the income tax authorities may soon start assessment proceedings against the online insurance aggregator, which has been under investigation for regulatory lapses and KYC non-compliance, shares of PB Fintech Ltd., the parent company of Policybazaar and Paisabazaar, fell 5% during trading on Tuesday.The report stated that the company would soon face assessment proceedings from the income tax department. According to a senior government official quoted in the Moneycontrol report, there were regulatory non-compliance issues related to know your customer (KYC) with PB Fintech. The income tax department also conducted a survey regarding these issues.
The source informed Moneycontrol that there are problems with regulatory oversight.Recall that on December 13 and 14, of last year, income tax officials visited Paisabazaar Marketing and Consulting Private Limited (Paisabazaar), a wholly owned subsidiary of PB Fintech Limited, and inquired about a few of Paisabazaar’s vendors. PB Fintech has already supplied the information that the IT officials requested, and it will keep providing any more information that the department may need.
PB Fintech update
PB Fintech stated the following in an exchange filing: “We would like to notify you that there has been no further development in the matter mentioned in our previous communication from December 14, 2023, regarding the Income Tax survey pertaining to our wholly-owned subsidiary Paisabazaar Marketing and Consulting Private Limited. Stock markets were informed by PB Fintech that “The Company shall continue to provide any further details/information that might be required by the IT department.”
PB Fintech stock performance
Following the event, the stock dropped 4.72% on the BSE, reaching a low of Rs 917.60. The stock made headlines recently when Temasek Holdings, a sovereign wealth fund based in Singapore, sold the entirety of its 5.42 percent stake in the insurance aggregator for a block deal worth Rs 2,425 crore.
According to reports, the RBI recently discovered hundreds of thousands of Paytm Bank accounts that were opened without the required documentation. Additionally, there were rumours that Paytm and its founder were the subject of a money laundering investigation by the Enforcement Directorate, which Paytm later dismissed as conjecture.
Keynote Capitals updated its earnings projections and recommended a target price of Rs 1,147 for PB Fintech in its Q3 review. According to the brokerage, PB Fintech was at a turning point in its development, propelled by factors like increasing renewal commissions, deliberate offline channel expansion into tier-2 and tier-3 cities, and strict cost control that it believed would result in advantageous operating leverage.In the December quarter, PB Fintech also revealed profitability for the first time, and the brokerage predicted that the trend would continue.
In an exchange filing, PB Fintech restated its position from an earlier correspondence dated December 14, 2023, emphasising that it will continue to supply further data as requested by the income tax department.In the aftermath of this event, PB Fintech’s shares fell 5.53%, bottoming out at Rs 911.35 on the Bombay Stock Exchange (BSE).This follows recent reports that Singapore’s sovereign wealth fund Temasek Holdings sold the insurance aggregator for a block deal of Rs 2,425 crore, which included the sale of its entire 5.42 percent stake.
The market had also heard reports of regulatory scrutiny directed towards other fintech companies, like Paytm, after the Reserve Bank of India discovered that many Paytm Bank accounts had been opened without the required documentation.Furthermore, there were rumours that Paytm and its founder were the subject of an Enforcement Directorate investigation for alleged money laundering, which Paytm later refuted.Keynote Capitals updated its earnings projections and established a target price of Rs 1,147 for PB Fintech in its third-quarter review.
The brokerage firm identified tier-2 and tier-3 city expansion through offline channels, growth in renewal commissions, and strict cost control as drivers of favourable operating leverage.In the December quarter, PB Fintech also revealed profitability for the first time, and the brokerage company anticipates that this momentum will continue.