In a significant financial downturn, Paytm, one of India’s leading digital payment companies, reported an increase in losses alongside a decrease in revenue for the latest quarter. This decline is attributed to the ongoing regulatory clampdown on digital financial services in the country.

For the quarter ending June 2024, Paytm disclosed a net loss of ₹1,107 crore ($149 million), a stark increase from the ₹619 crore loss reported in the same period last year. This widening gap in profitability has raised concerns among investors and market analysts about the company’s financial stability and future growth prospects.

Revenue also took a hit, shrinking by 7% to ₹1,100 crore ($148 million) compared to the ₹1,186 crore ($159 million) recorded in the corresponding quarter of the previous year. This decline in revenue reflects the challenges Paytm faces in navigating the stringent regulatory environment imposed by Indian authorities.

The decline in revenues is a direct result of the Reserve Bank of India (RBI) ordering the company earlier this year to cease most operations at Paytm Payments Bank, a subsidiary that processed much of the mobile payments that the company depended on. This is the first quarter where the full impact of RBI’s clampdown is visible on Paytm’s business.

RBI barred Paytm’s Payments Bank from offering many banking services, including accepting fresh deposits and credit transactions across its services, citing “persistent non-compliance” with rules.

The move forced Paytm to ink partnerships with other banks in India to continue offering some of its core services.

Shares of Paytm initially declined as much as 4.4%, but now have recovered and are up 2.2%, suggesting investors had already priced in the impact. Paytm had warned of the decline in revenue last quarter.