Just when Paytm was on the path of profitability, another obstacle came towards the Vijay Shekhar Sharma-led fintech major.
Reports emerged a few weeks ago, that Paytm will be halting their Buy-Now-Pay-Later postpaid feature.
Paytm addressed these reports by claiming that they will be recalibrating the portfolio origination of less than INR 50,000.
"While we’ll continue to do postpaid, and it may not be the same growth level that we were doing earlier, it will be significantly lower than what we were doing earlier, but it will be a product that will continue.” said Paytm.
This measure was used as a response to recent RBI directives asking banks and NBFCs to increase the amount of cash banks need to reserve to service risky loans.
But why is this recaliberation a speedbump? Loans under INR 50,000 made up to 75% of the total disbursements by Paytm, which are now out of picture.
The postpaid meant alot to Paytm’s young users without credit cards. Eventually, Paytm’s market cap tumbled from INR 55,256 Cr to INR 41,373 Cr in a week, a fall of 25%.
As lending was one of the main factors of Paytm’s revenue growth, Paytm now has to rely on adding more partners for its personal and merchant loans.