RBI’s Clampdown On PPBL Not The Biggest Setback Faced By Paytm: Vijay Shekhar Sharma

Nearly six months after the Reserve Bank of India (RBI) cracked down on Paytm Payments Bank Ltd (PPBL), Paytm’s founder and CEO Vijay Shekhar Sharma said that the regulatory action wasn’t the worst setback faced by the startup in its 14-year journey.

Speaking with Inc42’s cofounder and CEO Vaibhav Vardhan during a session at the JITO Incubation and Innovation Foundation’s (JIIF’s) Innovation Conclave, Sharma said that the startup saw much harsher times in the past. 

He pointed out that Paytm faced even tougher times while raising funding around 2013-14 due to delays in finalising agreements and investors pulling out at the last minute. He said that he thought that no one would care if the company had disappeared back then.

Addressing the RBI’s action on PPBL, Sharma said the issue did take a heavy toll on his emotional and personal wellbeing. 

“At a professional level, I would say we should have done better, there is no secret about it. We should have understood the situation better. We had responsibilities which we should have fulfilled in a better way. I think we have learnt our lesson from the issue and are making a better comeback,” he said. 

Citing persistent non-compliances and continued material supervisory concerns, the central bank, in January, barred PPBL from undertaking any deposits or credit transactions, or top-ups in any of its customer accounts. It also prohibited the payments bank from offering any other banking services, such as UPI facility and fund transfers post March 15, 2024.

Following this, Paytm’s shares crashed and the stock is yet to recover the losses. The company’s shares ended Friday’s (July 5) trading session at INR 436.60 on the BSE, over 40% lower from its price before the RBI’s clampdown. 

Despite the recent troubles, Sharma expressed optimism about the company’s future and said his vision is to turn Paytm into a $100 Bn company. 

Talking about the broader fintech sector, the CEO said it is critical for small businesses to get access to credit for the country to become a $5 Tn economy. To achieve this, fintech entities will need to offer loans as small as INR 1,000 to small merchants. 

It is pertinent to note that Paytm scaled down its focus on small loans below INR 50,000 amid the central bank’s concerns about the sharp rise in unsecured small loans. Earlier this year, Paytm paused its small personal loans business citing a decline in asset quality across industry. 

Sharma told Inc42 that while the company has paused disbursement of small loans for now, it plans to restart it in the long term.

Following the RBI’s action on PPBL, Paytm’s net loss tripled to INR 550.5 Cr in the March quarter of FY24 from INR 167.5 Cr in the year-ago quarter. Revenue from operations also decreased 2.9% to INR 2,267.10 Cr during the quarter from INR 2,334 Cr in Q4 FY23.