[ad_1]
Shares of One97 Communications Ltd (OCL), which owns Paytm brand, tanked 19 per cent on Thursday after the company announced to cut its postpaid loans below Rs 50,000, following the increase in risk weights on unsecured personal loans by the Reserve Bank.
The company’s stock closed at Rs 661.3 apiece on Thursday, down Rs 152 or 18.69 per cent. The share price hit the lower circuit of 20 per cent after it touched Rs 650.65 apiece.
On Wednesday, Paytm in a release said, “On the back of recent macro development and regulatory guidance, in consultation with lending partners, in line with its continued focus on driving a healthy portfolio, the company has recalibrated the portfolio origination of less than Rs 50,000, which is prominently the postpaid loan product and will now be a smaller part of its loan distribution business going forward.”
The company said it will expand its offering to include higher ticket personal and merchant loans to lower risk and high credit-worthy customers
Last month, the RBI raised risk weights on the exposure of banks towards consumer credit, credit card receivables and non-banking finance companies (NBFCs) by 25 per cent to up to 150 per cent. Risk weight refers to the capital banks keep aside as provisioning to cover any loan defaults.
Postpaid loans are Buy Now, Pay Later (BNPL) category of facility offered by Paytm’s NBFC partners – Aditya Birla Finance Ltd and SMFG India Credit (formerly Fullerton India Credit). The facility is available in the form of small on-demand loans that can be used to make online or offline purchases.
In a note, Macquarie said Paytm’s postpaid loans currently form around 55 per cent of disbursements (Q2 FY2024) with more than 70 per cent loans in less than Rs 50,000 segment.
“Management expects a 40-50 per cent decline in the run rate of postpaid loans. This coupled with muted PL (personal loan) disbursements (as seen in Q2) should lead to a decline in total disbursements and financial services revenue in the near term, in our view,” Macquarie said.
[ad_2]
