BENGALURU: India’s Paytm plunged as much as 20% on Thursday, its steepest decline since listing two years ago, as the digital payments firm plans to give out fewer low-value personal loans after the Reserve Bank of India (RBI) tightened rules on consumer lending.

The non-bank lender said on Wednesday it will go slow on sub-50,000-rupee (about $600) loans but expand its portfolio of high-ticket personal and commercial loans.

Paytm’s plan to give out more high-ticket loans won’t fully offset a scale back of smaller loans, Goldman Sachs analysts said.

The analysts downgraded One 97 Communications, which owns and operates Paytm, to ‘neutral’ from ‘buy’ and cut their price target to 840 rupees from 1,250 rupees.

The company’s net income will turn positive in fiscal year 2025-26, a year later than previously expected, due to slowing revenue growth, Goldman Sachs said.

The moderation in Paytm’s loan disbursal following the central bank’s measures is ahead of estimates, Jefferies said, trimming financial year 2024-2026 revenue estimate by 3%-10% and cutting the target to 1,050 rupees from 1,300 rupees.

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The so-called post-paid loans made up over half of Paytm’s total loans in July-September. Post-paid loans or buy-now-pay-later financing option allows customers to pay back for purchases in installments, typically with no interest.

Shares of Paytm, last trading 18.2% lower at 665.05 rupees, have risen 25% so far this year, outperforming the Nifty financial services index, which is up 10.7%.

Paytm currently has seven non-bank finance companies (NBFCs) as lending partners and plans to add one bank and two NBFC partners.

Aditya Birla Capital, whose unit is one of Paytm’s partners, fell 7%.

“We are seeing signs of second order impact of RBI’s recent regulatory tightening manifesting in the form of growth slowdown and increasing delinquencies in pockets of unsecured consumer loans,” IIFL Securities analysts said.