On the Bombay Stock Exchange (BSE), Paytm witnessed a more than 2% decline in its shares as part of a widespread sell-off in financial stocks. The negative market response is attributed in part to the recent decision by the Reserve Bank of India (RBI) to raise risk weights for unsecured retail loans. Analysts suggest that this move could potentially restrict loan growth for banks and indirectly impact fintech entities such as Paytm.
CLSA, a brokerage firm, has indicated that the RBI’s measure might result in a moderation of loan growth for banks, creating a ripple effect in the financial landscape that could influence fintech companies like Paytm. Known for its diverse digital finance products, Paytm might experience shifts in its business dynamics due to these changes.
Jefferies, another financial services company, offers a more nuanced perspective. While it suggests that the impact on Paytm could be minimal, considering that most of its Non-Banking Financial Company (NBFC) partners have a small portion of their lending in unsecured loans, Jefferies does acknowledge potential challenges. The firm highlights that increased funding costs and capital requirements might squeeze the profitability of Paytm’s Buy Now Pay Later (BNPL) and personal loan (PL) offerings. This, in turn, could lead to stricter credit standards or slower growth for these products.
Looking forward, Jefferies anticipates a slowdown in consumer loan disbursal growth, projecting a decline from an expected 90% in fiscal year 2024 to 40% in fiscal year 2025 and 35% in fiscal year 2026. This anticipated deceleration could impact lending revenues by 5-10% in fiscal years 2025 and 2026, potentially altering Paytm’s trajectory toward profitability.