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One quick thing: In its third consecutive annual price hike, Microsoft will increase the prices of its business software by 6%, effective from February 1, 2024.

In today’s newsletter: 

• Paytm plummets on loan shift
• Sarvam AI scores $41M for India-focused AI
• Govt's deepfake diktat for social media

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Hold onto your wallets, Paytm investors!

Shares of One97 Communications, the parent company of Paytm, took a nosedive today after the company announced its decision to scale back its low-ticket postpaid loans portfolio.

• The scrip plummeted 18.69% to close at Rs 661.30 apiece on the BSE

More than 3 crores shares changed hands, indicating heightened activity and shareholder concern.

• Multiple brokerage houses reduced their target price, stating that this could impact the company's revenue and profits

To be clear, Paytm is a lending platform and not a lender. It connects customers with financial institutions and earns a commission on this service.

Low-ticket postpaid loans contribute to around a quarter of Paytm's revenue. Postpaid is a typical buy now pay later (BNPL) loan with an average ticket size of around Rs 5,000.

• This segment contributed to around 56% of the loans disbursed through Paytm

Last month, the RBI increased capital requirements for banks and non-banking financial companies (NBFCs) when lending to the unsecured customer credit portfolio. This move, more than just the capital requirement itself, has spooked some lenders who have decided to reduce their exposure to this segment.

• Paytm, for instance, has a large portion of its loan portfolio (around 80%) comprised of unsecured loans

While the company is trying to shift its focus towards higher-value loans, investors are likely to adopt a wait-and-see approach before the stock recovers any losses. 

We discussed this impact in detail in a deep dive published last week.

The winds of change are swirling in the world of AI, and they're blowing strong in India! 

Today, homegrown generative AI startup Sarvam AI made waves with a whopping $41 million Series A funding round, setting a new record for the Indian AI scene this year. 

• The round was led by Lightspeed Ventures, with participation from Peak XV Partners and Khosla Ventures

 The firm was launched just five months ago, having previously operated in stealth mode while conducting research and developing products.

• Sarvam is developing a full-stack foundational model in generative AI, along with training custom AI models on an enterprise-grade platform for authoring and deployment

• Interestingly, Sarvam's founders, Vivek Raghavan and Pratyush Kumar, previously worked at the AI4Bharat research lab at IIT-Madras, which is backed by Infosys co-founder Nandan Nilekani.

What sets Sarvam apart is its specific focus on constructing foundational models using various languages tailored to Indian use-cases. 

• The company is gearing up to unveil its inaugural model to the public next week

AI, particularly generative AI, has risen to the top of the priority list for Indian investors. Some have even launched dedicated funds specifically targeting investments in AI companies.

• Funds such as SenseAI, Peak XV, Blume, and Lightspeed have demonstrated a heightened interest in AI startups

• AI firms have raised over $590 million in funding in the first six months of 2023, according to a report by SaaSBoomi and McKinsey

Dig deeper

'Fast and furious' appears to be the government's motto in its crackdown on deepfakes. After all, two ministers have chaired three meetings on the issue in just a couple of weeks.

The government has instructed social media companies to "actively assist" them in identifying and prosecuting deepfakes. 

• Experts point out that the IT Rules 2021 already required platforms to make "reasonable efforts" to curb and remove harmful content 

However, the government's latest shift in language could impose a more significant burden on internet platforms operating in the country.

In a presentation made by top government officials, platforms were warned of their non-compliance with the laws on keeping a check on harmful online content. 

• Additionally, the government identified at least six areas where the intermediaries were found to be floundering
  
  
• These included the submission of status reports, communication about prohibited content to users, and the alignment of their terms of service with the law, among others

Given the growing threat of deepfakes, the government has instructed social media platforms to develop a way that allows users to easily report harmful content.

• These in-app user reports will now be considered grievances under the IT Act, requiring platforms to respond to users in a timely manner

While the government maintains that the existing amended IT Rules provide sufficient tools to address deepfakes, it has also announced the development of new regulations to impose penalties on individuals who upload or create such content.

Go deeper

December was a disastrous month for Chennai as some of the city's key manufacturing, software, and small and medium enterprises (SMEs), including Foxconn and automotive players like TVS and Hyundai, bore the brunt of the heavy rains and floods.

• While the rains subsided on December 5, the aftermath caused production delays, transportation disruptions, and a labour shortage

But impossible as it may seem, even Rajinikanth's Chennai home couldn't escape the wrath of Cyclone Michaung.

Find out more 

• Google's AI chatbot Bard receives its biggest upgrade with Gemini, the company's newest and most advanced AI model available in three sizes for diverse tasks (including helping McDonald's deliver "hotter, fresher food"!).
  
  
• Meta Platforms is betting big on AI to drive user engagement across its platforms, testing over 20 generative AI features from search to ads for a global rollout.

• EU countries and lawmakers reached an agreement on rules governing AI systems like ChatGPT.

Taylor Swift, queen of pop, has been crowned Time's Person of the Year!  

• This year saw her Eras Tour breaking records, her personal wealth approaching $1 billion, and now, this prestigious honor

Time recognised Taylor as a "rare person who is both the writer and hero of her own story."  

Oh, and did we mention Benjamin Button, the esteemed feline, made a special guest appearance on the Time cover? 

Swift edged out other heavyweights like Chinese President Xi Jinping, Britain's King Charles III, Barbie, and even OpenAI CEO Sam Altman, who was named Time's "CEO of the Year."

Event alert: CNBC TV18 & Moneycontrol will be hosting the most definitive summit on Artificial Intelligence with top global and Indian voices on December 16th in Bengaluru. Click here to register and get access to the 'Palo Alto Networks presents CNBC-TV18 & Moneycontrol Global AI Conclave'.