Why did Paytm crash 20% today? | Paytm share down | Paytm share news today |
On December 7th, a major setback hit the digital payment giant, Paytm. Its parent entity, One97 Communications, witnessed a staggering 20% drop in shares, hitting the lower circuit at ₹650.45 per share. Delve into the four significant reasons behind Paytm's substantial crash in this video.
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*Reason 1: Paytm’s plan to reduce small ticket loans*
The primary reason behind Paytm's fall is its strategic shift announced on December 6th. Paytm disclosed its intention to focus more on higher-ticket loans rather than low-ticket personal loans. Experts express reservations, citing potential impacts on Paytm's loan disbursement run-rate and heightened competition in the higher-ticket loans segment.
*Reason 2: RBI’s risk weight rejig*
The second reason stems from a recent RBI regulation requiring banks and NBFCs to allocate 25% more capital for personal and credit card lending. This adjustment, leading to a higher cost of lending, may adversely affect companies like Paytm, heavily reliant on personal loans.
*Reason 3: RBI’s ₹5.39 cr penalty on Paytm Payments Bank*
In October, RBI imposed a ₹5.39 crore penalty on Paytm Payments Bank for non-compliance with KYC and cybersecurity guidelines. Despite previous restrictions, the bank's continued non-compliance has diminished the likelihood of lifting these restrictions, tarnishing the company's image.
*Reason 4: Buffett's Berkshire Hathaway's exit from Paytm*
The fourth reason involves Warren Buffet's Berkshire Hathaway exiting Paytm, selling its entire 2.46% stake. Despite incurring significant losses, this move by a renowned investor has shaken retail investors' confidence in the company.
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