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Shares of Paytm fell another 20% Friday before hitting the lower circuit that temporarily halts trading as the Indian financial services firm reels from the clampdown by the central bank.<\/p>\n
Paytm fell to 487 Indian rupees, or $5.88 within minutes of the market opening, the lowest it has hit in 55 weeks. Paytm shares also fell 20% on Thursday. Paytm, which currently has a market cap of $3.73 billion, has lost $2.1 billion in its market cap in two days.<\/p>\n
The Reserve Bank of India (RBI) this week widened its curbs on Paytm\u2019s Payments Bank, which processes transactions for financial services giant Paytm, barring it from offering many banking services<\/a>, including accepting fresh deposits and credit transactions across its services. In response, Paytm said it will terminate business with its affiliate<\/a> and seek partnership with other banks.<\/p>\n Even as Paytm insists that the RBI\u2019s direction will, at worst, erase $60 million from its annual EBITDA, the market at large is reading the situation differently.<\/p>\n Paytm\u2019s management is aiming to offset the loss over time and sees a manageable impact on its UPI business, they said on an analyst call Thursday afternoon. While economics are expected to be largely unchanged, there could be some moderation in UPI incentive fees, Morgan Stanley analysts said Friday.<\/p>\n \u201cPaytm sees no impact on insurance distribution and equity broking business. With respect to loan distribution, management expects moderation in disbursements over the next few weeks, and said it is in the process of reaching out to partners to explain the current circumstances to them. Further, the bank does have certain merchant loans where the settlement happens in PPBL (Paytm Payments Bank Limited) bank accounts \u2013 it said it is in the process of shifting to alternate bank accounts of the merchants, and doesn\u2019t expect any significant impact,\u201d the analysts wrote in a note.<\/p>\n