RBI directive impact: Paytm recalibrates loan distribution biz strategy

One97 Communications Limited (OCL), which owns Paytm, on Wednesday, said that it is consciously pruning its loan disbursals below ₹50,000. At the same time, this fintech major has decided to expand its credit distribution business so as to enhance focus on higher ticket loans for consumers and merchants.

This comes days after the Reserve Bank of India (RBI) increased the risk weights — the capital that banks need to set aside for every loan disbursed — for banks and NBFCs by 25-125 per cent on retail loans.

“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”, Paytm said in a statement, alluding to RBI’s recent directive.

  • Also read: Warren Buffet’s Berkshire Hathaway exits Paytm

Merchant loans, which are given to MSME as business loans, will continue to be a focus for Paytm. As these loans are given for business purposes to small merchants, they don’t get impacted by the recent regulatory guidance.

A Paytm spokesperson said, “As the lending distribution business is maturing, we see newer opportunities of expansion to offer high-value personal and merchant loans. We will continue to focus on originating the high portfolio quality for our lending partners, along with strict adherence to risk and compliance. We have seen great scale and acceptance for our loan distribution business, so we believe this expansion will further aid us to grow the business.”

 Paytm continues to add banks and NBFCs as its lending partners for its loan distribution business. 

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