Days following the RBI's surprise announcement, Paytm announced on Wednesday that it will limit loan disbursements below Rs 50,000. This move comes only days after the Reserve Bank of India (RBI) boosted the risk weights, or the capital that banks must keep aside for each loan given, for banks and non-bank financial companies (NBFCs) by 25 percentage points to 125% on retail loans.
Paytm said it is growing its credit distribution business in collaboration with banks and NBFCs to focus on higher priced loans for consumers and merchants.
Paytm has temporarily suspended its Buy Now, Pay Later service as lending partners have become wary about fintech partnerships following the RBI's 25% increase in risk weightages for unsecured lending, according to the Economic Times.
On Wednesday, the stock of One 97 Communications Ltd, Paytm's parent company, closed 3.2% lower on the BSE at Rs 812.25.
"On the back of recent macro development and regulatory guidance, in consultation with lending partners, in line with its continued focus on driving a healthy portfolio, the company has recalibrated the portfolio origination of less than 50,000, which is prominently the postpaid loan product and will now be a smaller part of its loan distribution business going forward," said Paytm in a statement in response to the RBI's recent ultimatum.
Paytm would continue to focus on merchant loans, which are supplied to MSME as business loans. Because these loans are made to small businesses, they are unaffected by the current regulatory guidance.
"As the lending distribution business matures, we see newer opportunities for expansion to offer high-value personal and merchant loans. We will continue to focus on originating high-quality portfolios for our lending partners while adhering to tight risk and compliance guidelines. We've experienced a lot of growth and acceptance for our loan distribution business, so we anticipate this expansion will help us much more," a Paytm representative said.
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Meanwhile, there have been countless posts on X concerning consumers being unable to make postpaid payments. "Even after scanning the QR code the postpaid option is not activating to pay," a customer commented.
Paytm's customer service has consistently responded to such messages with the same message: "Hi, please let us have this checked on priority." To preserve the confidentiality of your information, we ask that you DM us your registered mobile number so that we can assist you as soon as possible. I look forward to hearing from you."
"My Paytm postpaid account is not working despite having an available balance," another X user complained. "Mine is active, valid until September 2024, with a full limit available, but I can't use it anywhere. Paytm is also not responding properly," claimed another frustrated Paytm user on X.
