Paytm To Resume Loan Disbursals In First Week Of March

Amid regulatory troubles, Paytm’s parent entity One97 Communications is reportedly looking to restart its lender platform provider operations in the first week of March. 

“Initially we had planned to resume operations on March 1, but some discussions are still going on, so it will start in the first week of March,” a person aware of the matter told MoneyControl.

Paytm was not immediately available to comment on the development.

Paytm offers personal loans of up to INR 5 Lakh in partnership with banks and non-banking financial companies. 

However, the company temporarily stopped this service following the Reserve Bank of India’s clampdown on Paytm Payments Bank. It is important to note that the lending business is not connected with the payments bank.

However, Reuters reported earlier this month that NBFCs and banks were shying from partnering with the fintech giant for loan disbursals amid the regulatory crisis. 

Earlier, in a conference call on February 1 after the RBI’s action on Paytm Payments Bank, the Paytm management said that the company “will not be originating loans for may be a couple of weeks”.

Paytm’s lending partners had sought clarity on the implications of the RBI’s action on the lending vertical of the company. The company then said that it would be engaging in conversations with lenders to address their concerns. Meanwhile, the loans section on the Paytm app shows a similar message to address user concerns.

“Digital Loans are provided by our Bank/NBFC partners on the Paytm App (owned by One97 Communication Ltd.) which acts as a DLA/LSP in line with RBI regulations,” the message reads. 

While Paytm’s lending business grew rapidly in the first three quarters of 2023, the company decided to scale down its focus on small-ticket loans of less than INR 50,000, which predominantly comprised postpaid loan business. The decision was prompted by the central bank’s move to tighten norms around unsecured lending.

To compensate for this, Paytm said it would increase disbursal of high-ticket personal and merchant loans, which would be targeted at “lower-risk and high credit worthy customers”, in partnership with large banks and NBFCs.

Consequently, the loans disbursed by Paytm grew 56% year-on-year to INR 15,535 Cr in Q3 FY24. However, it declined over 4% on a quarter-on-quarter basis, largely because of the decision to scale down the postpaid loans business.

Meanwhile, the company’s shares continue to see high volatility following the RBI’s action on Paytm Payments Bank. After emerging as the biggest gainer among new-age tech stocks last week, shares of Paytm rose 5% to hit the upper circuit at INR 427.95 on the BSE on Monday (February 26).