After a two-month hiatus, One 97 Communications-owned Paytm has reopened its lending operations in collaboration with its current non-bank lending partners, SMFG India Credit (previously Fullerton) and Shriram Finance.
The action was taken nearly 15 days after the Reserve Bank of India prohibited its banking subsidiary, Paytm Payments Bank Limited (PPBL), from taking deposits or top-ups in any customer account, prepaid device, wallet, FASTag, or NCMC card after March 15, 2024 due to material and ongoing non-compliances.
By increasing the risk weight for banks and non-banking finance firms (NBFCs), the RBI tightened the guidelines for unsecured consumer loans. Following an RBI initiative to slow the expansion of unsecured personal loans, Paytm said in December 2023 that it will discontinue its most popular credit product, Paytm Postpaid, a buy-now-pay-later (BNPL) service for retail consumers.
Following this, according to a Moneycontrol story on Tuesday, Vijay Shekhar Sharma temporarily stopped making fresh loan disbursements as its partner banks and NBFCs sought further clarification on the RBI's instruction.
According to sources cited in the article, Paytm is now attempting to collaborate with Muthoot Finance on loans for both individuals and businesses.
It got going again on March 21. Both new loans and top-ups from current merchants have totaled over 500 crore in disbursements thus far, according to individuals who spoke with Moneycontrol.
Even though PPBL and Paytm are two different companies, between 10% and 15% of Paytm merchants—or around 60,000–70,000 merchants—had autopay requirements set up through their PPBL accounts.
Paytm has allegedly completed over 85% of the transfers of its settlement accounts to other banks after the central bank imposed limitations on PPBL.
Aditya Birla Finance, Hero Fincorp, Piramal Capital, Poonawalla Fincorp, Shriram Finance, SMFG India Credit, and Tata Capital are the seven non-bank lending partners of Paytm.
According to a corporate presentation given to investors, Paytm, then known as One 97 Communications, issued loans totaling 155 billion rupees ($1.9 billion) on behalf of the seven lenders during the October–December quarter.
Although Paytm has resumed its lending services, according to sources cited in the story, most lenders are wary as they want to examine the cash movement and trace of PPBL in the same way. "They continue to check books and product systems to make sure everything is in line, but they haven't decided on the cooperation yet. Before making any fresh loan commitments, lenders are still playing the waiting game, according to one of the individuals.
