Not applying for NBFC licence, focus on distribution, says Paytm CFO

Company will instead focus on existing model of credit distribution, in partnership with other lenders

Fintech firm Paytm will not apply for a non-banking financial company (NBFC) licence anytime soon after the regulator last month cancelled the permit of its associate entity, Paytm Payments Bank.

 

The company’s decision is unlike the strategy of its fintech peers. MobiKwik and Navi Finserv have secured regulatory approval to operate as NBFCs, while PhonePe has reapplied to the Reserve Bank of India (RBI) for a licence.

 

Paytm said it will instead focus on strengthening distribution and technology, while its lending partners such as other banks and NBFCs manage capital and risk.

 

Paytm’s stock price rose 8.02 per cent to ₹1,199.25 per share on Thursday on the Bombay Stock Exchange (BSE) following its Q4FY26 earnings.

 

 

“We are not super excited about going for an NBFC licence. The rationale for that is probably two things: One is we really like our model where we stick to what we are uniquely good at, which is distribution, building great technology so that merchants can convert better — (there are) insights on these merchants and collection abilities,” Madhur Deora, president and group chief financial officer of Paytm, told analysts.

 

Second, the credit market has enough opportunities, he said.

 

“We have a large payments market. The market is growing; our market share is growing. That — combined with low penetration (for credit) — means that the opportunity in the short to medium term already is very, very large. We do think that logically that loan book should sit on multiple balance sheets — not a single balance sheet, neither ours nor a single partner’s.”

 

The company’s earnings statement said its model and customer base suited expanding in lending. Paytm will remain “asset light” and bring “many blue chip partners” to its platform.

 

Most fintech companies want an NBFC licence to lend directly as the scope of making money from payments is thin. An NBFC licence can improve access to capital, enable co-lending partnerships and give fintech firms greater control over the lending lifecycle. Over time, it can also help lower the overall cost of capital.

 

AI push

 

Vijay Shekhar Sharma, founder and chief executive officer of Paytm, said the company will invest in artificial intelligence (AI) for inorganic growth.

 

“Any new investment will only be in AI. It’s the same customer and merchant. Primarily, making their life better [is a focus]. We believe there will be a significant amount of opportunity for us to create agents,” Sharma said.

 

Payments Bank had ₹13,315 crore cash in FY26, said the fintech company in its earnings release. The capital is expected to be used for capital expenditure, margin trade funding business and AI investments, among other things.

 

Wealth-tech push

 

Sharma added that wealth technology (wealth-tech) was the company’s third leg of growth after payments and financial services and it aimed to be among the top five players in the country.

 

Paytm Money, the wealth-tech platform, needed a “dramatic” investment focused on AI features. Sharma said he was “lucky” to have not made major investments in the platform before AI’s advent.

 

“AI is changing everything. [AI] agents will show up, do trading, and take care of portfolio readjustments. Agents will review trading strategies of yours. I feel lucky that we did not dump a lot of money earlier because in the AI world, everything resets,” he said.

 

One97 Communications, which operates the Paytm brand, posted a consolidated net profit of ₹184 crore in the fourth quarter of FY26 compared to a loss of ₹540 crore in Q4 FY25.

 

Revenue from operations grew 18.41 per cent year-on-year in Q4 FY26, while expenses increased 5.3 per cent.