Paytm shares fall as the digital payment firm decides to slow down post-paid loan disbursal

Bengaluru, 7 December: Shares of fintech major Paytm nosedived close to 20 per cent as the company announced its plans to substantially slow down small-ticket postpaid loans disbursement.

On Wednesday, the digital payment firm said that it has decided to cut down on disbursing loans under Rs 50,000, a move which is widely seen as move that came after the Reserve Bank of India tightened rules on consumer lending.

The central bank recently increased the risk weight on consumer loans advanced by commercial banks and non-banking finance companies by 25 percentage points. The consumer credit of banks and NBFCs, which used to attract a risk weight of 100 percent, would now been revised to 125 percent.

However, Paytm said that it would to expand its higher-ticket loans portfolio. Though the management has clarified that such reduction of postpaid loans on Paytm's revenue growth would be minimal, investors seemed wary of this development.

Brokerage firm Jefferies said in a report that Paytm's decision to recalibrate its 'Buy now pay later' (BNPL) business came as lending partners dialled back after RBI's recent move on unsecured lending.

BNPL disbursals, which make up 55 percent of total disbursements of Paytm will halve in the next 3-4 months, Jefferies added in the note. Even though the management plans to partially offset it by scaling up its high-ticket personal loans and merchant loans, Jefferies said, the quantum of tightening for the BNPL business is ahead of expectations.

Similarly, another brokerage firm Motilal Oswal Financial Services said Paytm's total disbursement run rate is also likely to decline to around Rs 4,500 crore per month from of about Rs 6,000 crore per month. "Paytm adds average 3.5-4 lakh customers every quarter, which is also expected to come down by 50 percent," the brokerage firm said in a note.