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Macquarie dramatically cut its 12-month price target on One97 Communications, the parent company of digital payments firm Paytm, citing risks of customers leaving the platform in the wake of heightened regulatory scrutiny. Macquarie, which famously predicted the slump at Paytm before the listing, lowered its target to 275 rupees ($3.3), the most brutal by any major brokerage firm.

Paytm, which ended the Monday trading session at 419.85 Indian rupees, is reeling from the Indian central bank’s clampdown. The Reserve Bank of India late last month ordered Paytm to all but shut down operations at Paytm Payments Bank, an associate of Paytm that processes all its transactions.

The analyst group, led by Suresh Ganpathy, wrote in a note Tuesday that it believes Paytm will see a sharp reduction in revenues and the regulatory crackdown poses a “serious risk of exodus of customers.”

A price target of 275 rupees would value Paytm at around $2.1 billion, a steep plunge from its peak market capitalization of nearly $20 billion in late 2021.

“We cut revenues sharply as we reduce both payments and distribution business revenues (60-65% over FY25/26E). Moving payment bank customers to another bank accounts or moving related merchant accounts to other bank accounts will require KYC (know your customer) to be done again based on our channel checks with partners, indicating that migration within RBI’s Feb 29th deadline will be an arduous task.”

Paytm — which makes most of its money through lending — is also likely to face challenges retaining its lending partners, Macquarie added. Paytm doesn’t have the license to operate as a non-banking financial company (NBFC), and acts as a distributor in connecting lending partners with borrowers.

“Our channel checks with some lending partners reveal that they are re-looking at their relationship with Paytm which eventually could lead to a decline in lending business revenues in case partners scale down or terminate their relationship with Paytm. AB Capital, one of Paytm’s largest lending partners, has already pared down their BNPL exposure to Paytm from a peak level of Rs20bn to Rs6bn currently and is expected to go down further in our view.”

India’s central bank last week said it takes supervisory actions and imposes business restrictions only after “persistent non-compliance” with rules, its first comment after a clampdown on Paytm last week has posed existential questions about the future of the leading financial services firm.

Shaktikanta Das, the Reserve Bank of India (RBI) governor, said the central bank always engages with regulated entities bilaterally and nudges them to take corrective action. If the central bank takes actions, “it is always proportionate to the gravity of the situation,” said Das in a media briefing. “All our actions, being a responsible regulator, are in the best interest of systemic stability and protection of depositors’ or customers’ interest,” he added.