Global research firm Macquarie said that the decision to restructure Paytm’s loan portfolio was a preemptive measure taken in consultation with partners.
“Asset quality in the personal or deferred loan segments has not deteriorated,” Macquarie said in a note. One 97 Communications, the parent company of Paytm, had earlier decided to reduce its microloans.
Macquarie has a ‘neutral’ stance on Paytm and has maintained a target price of ₹900 per Paytm share, representing a potential upside of nearly 46% from Monday’s closing price.
“For deferred loans, management has indicated that this was a risk-averse decision based on the strains seen in certain parts of the system. While the CoF for NBFC counterparties will increase due to higher risk weighting on NBFC bank financing, for products like payday loans, the impact is insignificant due to product duration. short product (up to 30 days),” the research firm said.
Paytm management said there is an opportunity to increase the size of large personal loans as some customers have also qualified for higher loan amounts earlier, but with Paytm’s lending model limited limited to a note amount of up to 0.3 million yen, the above-mentioned customers will borrow. from other lenders.
“In addition, customers are also taking out personal loans through Paytm despite having primary deposit relationships with other banks. Paytm identified this as an opportunity in the high-cost (₹0.3-0.7 million) personal loan market, Macquarie said.
Previously, the fintech giant had also increased the size of its inquiries for clients that were of good quality and did not face any asset quality concerns. “This can be clearly seen as the number of personal loan vouchers has nearly doubled in the past two years. The company has started offering high-priced personal loans in the past 4-5 months,” he added.
In the payments space, Paytm management expects merchants and customers to remain loyal to the service proposition. In the lending segment, given the competition, Macquarie believes that Paytm aims to continue to upsell to high-quality customers where it has a data advantage.
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