Aditya Birla Finance, one of the lending partners of Paytm, has invoked its loan guarantees due to defaults by the fintech’s customers. The development sent the stock of Paytm parent One97 Communications Limited (OCL) tumbling to its all-time low.

The OCL share ended with cuts of 5 per cent or ₹16.70 at ₹317.45 on the BSE. Similarly, on the NSE, it settled at ₹317.15, a fall of ₹16.70.

Other partners such as Piramal Finance and Clix Capital have also withdrawn their partnerships with the fintech firm.

Investors fear these developments could further hurt Paytm’s lending business which had shown a strong growth recently. It also comes amid a slowdown in unsecured loans after the Reserve Bank of India (RBI) hiked risk weightage against such lending in November.

Paytm does not directly lend to customers; it sources loans from partners such as Aditya Birla Finance for which the fintech firm earns a commission.

The report quoting sources said that Aditya Birla Finance could have invoked a large sum amounting to hundreds of crores of rupees which could have a big impact on the company’s financials.

A Paytm spokesperson said that the company has rejected all speculations regarding its lending business.

It has resumed lending services with a select few partners and is at the same time engaged in discussions to expand with the remaining lending partners.

For the quarter ended December 31, 2023, Paytm disbursed more than ₹15,500 crore of loans, up from ₹9,958 crore in the year-ago period.

The fresh setback comes as Paytm saw a dip in UPI transactions for the third straight month in April.

According to NPCI data, it processed 1117.3 million transactions in April, lower by 9 per cent over March. Its market share in UPI applications moderated to 8.4 per cent from 9.13 per cent in March.

Paytm was recently hit by the resignation of president and chief operating officer Bhavesh Gupta. He was leading the lending business, online and offline payments, and compliances.