Big risk as Paytm trims small loans

Small is no longer beautiful for One97 Communications Ltd, which owns the brand Paytm. The mobile payments and financial services distribution company has decided to reduce the disbursement of sub-₹50,000 small-ticket loans.

- Vineetha Sampath & Pallavi Pengonda

These are primarily postpaid loans or buy-now-pay-later products, which formed 56% of its loan disbursements during the September quarter (Q2FY24) in value terms. Postpaid loan disbursement is expected to halve in the coming months. Investors were visibly upset, dragging the stock down by almost 19% on Thursday.

Paytm's move follows Reserve Bank of India's (RBI) decision to increase risk weights for unsecured retail lending. News reports suggest that ZestMoney, a fintech lending startup specializing in buy-now-pay-later products, may close operations due to reductions in partnerships with lending partners.