The move comes almost 15 days after its banking arm, Paytm Payments Bank Limited (PPBL), was barred by the Reserve Bank of India from accepting deposits or top-ups in any customer account, prepaid instruments, wallets, FASTags and NCMC card after March 15, 2024, owing to persistent non-compliances and material.
Since the central bank had put restrictions on PPBL, Paytm has been working on moving their settlement accounts to other banks.
One 97 Communications controlled Paytm has restarted its lending activities in a tie-up with its existing non-bank lending partners SMFG India Credit (formerly Fullerton) and Shriram Finance after it stopped its services for about two months.
The move comes almost 15 days after its banking arm, Paytm Payments Bank Limited (PPBL), was barred by the Reserve Bank of India from accepting deposits or top-ups in any customer account, prepaid instruments, wallets, FASTags and NCMC card after March 15, 2024, owing to persistent non-compliances and material.
The RBI tightened the norms for unsecured consumer loans by raising the risk weight for banks and non-banking finance companies (NBFCs). In December 2023, Paytm said it would opt-out of its most popular credit product — Paytm Postpaid, a buy-now-pay-later (BNPL) offering for retail users, after RBI move to rein in the growth of unsecured personal loans.
Following this, Vijay Shekhar Sharma temporarily halted new loan disbursements, as its partner banks and NBFCs sought more clarity on RBI’s directive, Moneycontrol reported on Tuesday.
Sources quoted in the report said that Paytm is now trying to tie up with Muthoot Finance for both personal and merchant loans.
“It resumed around March 21. Over 500 crore loans have been disbursed so far, which includes both top-ups from existing merchants and some new loans,” sources told Moneycontrol.
While Paytm and PPBL operate as separate entities, around 10-15% of Paytm merchants (approximately 60,000-70,000 merchants) had set up autopay mandates through their PPBL accounts.
Since the central bank had put restrictions on PPBL, Paytm has been working on moving their settlement accounts to other banks and has reportedly completed over 85% of the transfers.
Paytm has seven non-bank lending partners: Aditya Birla Finance, Hero Fincorp, Piramal Capital, Poonawalla Fincorp, Shriram Finance, SMFG India Credit and Tata Capital.
Paytm, known formally as One 97 Communications, disbursed loans worth 155 billion rupees ($1.9 billion) on behalf of the seven lenders in the October-December quarter, according to a company presentation to investors.
Sources quoted in the report said that though Paytm has restarted its loan services, most lenders are cautious as they want to look at the fund flow and trace of PPBL in the same. “They are yet to make a decision on the partnership while continuing to verify books and product systems to ensure everything is in order. It’s still a wait-and-watch game for lenders before they start with new loans,” one of the sources said.
