Since a payments bank is not allowed to lend, the company is looking the possibility of getting an NBFC license.

Paytm bets big on its online lending business looks to make it a major income stream
Atom Digital Payments Saturday, January 18, 2020 - 10:22
Written by  S. Mahadevan

Fintech startups getting into lending has become the norm rather than the exception. One of the oldest players in this sector, Paytm, now wants to scale up its lending business and would want to secure a NBFC licence for this, going ahead, reports Economic Times.

At the moment, the company has tied up with Clix Capital (formerly GE Money Financial Services), to offer loans or deferred payment options to its customers. The Paytm customers can make unlimited amounts of payments through their QR code-based payments system and keep making repayments over a period of time. The present arrangement with Clix Capital was more in the form of a trial. While scaling up, the company may rope in more NBFCs for releasing the loans. Paytm will then eventually apply for and obtain a licence to operate as an NBFC.

Paytm is under pressure, as reported earlier, to cut down its losses and to start making profits. Lending business can definitely help the company build revenue and earn profits.

The advantage Paytm has is the 15 crore strong users of its app in the country. Being one of the early digital wallets, the company took full advantage during the demonetization exercise in 2016. This large captive base of customers will come useful in the lending business. Already the company is into providing leads to the NBFCs for loans. There are 1.5 crore merchants who have signed up with Paytm.

The company already has its Paytm Payments Bank, but payments banks are not allowed to lend under RBI norms. The payments banks have now approached RBI to convert themselves into small banks. If that comes through the lending and the income through these loans will accrue on the books of One97 Communications, the parent company.

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