Paytm share price hits 20% lower circuit limit after it announced cut down on slow ticket postpaid loans

Paytm loans: Fintech company Paytm's shares have hit 20% lower circuit limit  reaching Rs 650 a piece. This after the company announced its plans to slow down its small ticket Postpaid loan. However, the company is looking to expand its high ticket personal and merchant loans. This the company said in an analyst meet on December 6.

Lower circuit limit is the minimum price a stock can reach in a particular day. 

The cut down on slow ticket loans comes, after RBI tightened the norms for unsecured consumer loans by raising the risk weight for banks and non-banking finance companies (NBFCs) in November.  

Paytm shares tumble

Shares of Paytm tumbled after analysts downgraded the stock as the company decided to bring down the level of unsecured loans under Rs 50,000 in a calibrated manner.

As per CNBC-TV18, brokerage firm Goldman Sachs downgraded the stock, shifting its rating from 'buy' to 'neutral' and revising the target price to Rs 840 apiece from the earlier Rs 1,250.

Similarly, Jefferies adjusted its target price to Rs 1,050 from Rs 1,300 but maintained a 'buy' rating. Bernstein also lowered its target price to Rs 950 from Rs 1,100. However, domestic brokerage firm Motilal Oswal maintained a 'buy' rating with a target price of Rs 1,025 apiece.

Postpaid loan reduction

As per the company, the postpaid loans could be down by 50% but will not have any impact on margins or revenue. Paytm also added the revenue impact will be minimal since postpaid had the lowest take rate. Slow ticket loan amounts to less than Rs 50,000

Also Read: RBI strengthens regulations on personal loans for banks and NBFCs

"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 ₹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 in a media statement.

The company also assured that none of its lending partners have stopped lending to its customers. Paytm facilitates lending on its platform through its partnership with lenders such as Aditya Birla Finance Limited (ABFL), Piramal Finance, Shriram Capital and Tata Capital among others.

Paytm receives commissions as well as collection charges for the loans provided on its platform.

Users complain

Meanwhile several users in X(formerly Twitter), has complained about the postpaid services being slow since December 1. Some users even claimed that their accounts have been blocked for multiple users despite paying the loans on time.

Moneycontrol quoted some users who received messages saying that the platform is getting upgraded and security measures is being enhanced.

"We are upgrading the experience and enhancing security measures. We will be back soon" - the message received by users as seen by Moneycontrol.