Paytm Stares At Customer Exodus After RBI Curbs On Payments Bank, Says Macquarie's Suresh Ganapathy
A customer exodus from the payments bank would necessitate lenders to reassess their decisions and relationships with parent One97 Communications, says Ganapathy.
Regulatory restrictions on Paytm Payments Bank Ltd. risk disruption to its ecosystem since the lending division is the primary business driver for flagship Paytm, according to Macquarie Capital's Suresh Ganapathy.
The restrictions placed on Paytm Payments Bank have undoubtedly raised concerns about a potential exodus of customers, Ganapathy, managing director and head of financial services research at Macquarie, told NDTV Profit.
If such a customer exodus occurs, he said, it would necessitate lenders to reassess their decisions and relationships with parent One97 Communications Ltd.
Macquarie Equity Research downgraded One97 Communications to 'underperform' and cut its target price by 58%, citing that the payments firm is "fighting for survival".
The restrictions are likely to lead to a substantial decline in Paytm's distribution business, which is the highest Ebitda contributor for the company, said Ganapathy. "And in the view that these numbers can come down significantly, we have changed our view on the stock and cut the target price."
Macquarie cut Paytm's revenue estimates, as it reduced both payments and distribution business revenues by 60–65% over FY25/26E.
Lenders reducing their exposure to Paytm Payments Bank are expected to directly impact Paytm's revenue. The company faces challenges in quantifying potential loss from customer exodus and setbacks in the lending business, Ganapathy said. Any new customer onboarding will now necessitate thorough Know Your Customer processes, a consequence attributed to the developments surrounding Paytm.
"With the RBI crackdown, Paytm can no longer be distinguishable from other UPI transaction apps. The business revenue and how it survives the RBI crackdown will decide any future outlook."
On Jan. 31, the Reserve Bank of India imposed curbs on Paytm Payments Bank, restricting fresh deposits into customer accounts after Feb. 29. The regulator allowed customers to use their existing balances through payment withdrawals or transfer transactions.