Paytm expands loan distribution business, targets personal, merchant loans

Paytm said that it would continue to collaborate and add banks and NBFCs as lending partners for its loan distribution business

One97 Communications Ltd (OCL), Paytm's parent company, has announced the expansion of its loan distribution business with a focus on targeting higher-value loans for individuals and merchants. The digital financial services provider aims to cater to the demands of lower-risk and high creditworthy customers in partnership with large banks and non-banking financial corporations (NBFCs).

The company ventured into the loan distribution domain in the previous quarter. According to an official release by the firm, Paytm has already experienced robust portfolio performance and widespread acceptance of its loan distribution services. Building on its early successes, the company is now looking to amplify its presence in the lending market.

Paytm will mainly be focusing on merchant loans, tailored explicitly for micro, small, and medium enterprises (MSMEs). Paytm claimed that it has remained unaffected by recent regulatory changes and that these forms of business loans were crucial for the company as they serve the financial needs for a high number of small merchants.

In response to recent macro developments and regulatory guidance, Paytm, in consultation with lending partners, has recalibrated the portfolio origination for loans of less than Rs 50,000. This primarily affects the postpaid loan product, which will now constitute a smaller portion of Paytm's loan distribution business.

On the announcement of the expansion in loan distribution, a Paytm spokesperson stated, "As the lending distribution business matures, we see newer opportunities for expansion to offer high-value personal and merchant loans. Our focus remains on originating a high-quality portfolio for our lending partners, maintaining strict adherence to risk and compliance. The substantial scale and acceptance of our loan distribution business give us confidence that this expansion will contribute significantly to our business growth."

Paytm also said that it would continue to add and collaborate with banks and NBFCs as lending partners for its loan distribution business.