Paytm is out to expand its verticals leveraging what it has already built, in terms of member establishments that accept their digital payments and other resources. The new business it wishes to enter is peer to peer lending and is seeking a license from the regulator RBI, if reports are to be believed.
Though there has not been any official announcement directly from Paytm, it is learnt that the company has already passed a resolution in its Board meeting held on February 7 to this effect. This much has been confirmed through their mandatory filings with the Registrar of Companies (RoC). It is to be expected that the company would have followed it through with an application to RBI as well.
It is clear from the documents accessed, that Paytm’s intention is to setup a “non-banking financial company — peer-to-peer”. The RBI is yet to make public the names of the firms which have applied for P2P NBFC licenses. Back to Paytm’s filing with RoC; “to carry on the business of NBFC-P2P lending platform as an intermediary to provide the services of loan facilitation via web or app medium or otherwise…” makes the whole thing quite clear.
Observers point out that there are 7 million establishments associated with Paytm across the country and the digital payments firm is said to be already involved with some form of informal lending of small amounts with some of them.
They are possibly using other firms with NBFC licenses to do this. Once they have the license, whenever it comes through, Paytm may start with small ticket advances and then expand, including foraying into other financial products, like insurance.
This development can also create challenges for startups which have entered the P2P lending segment. There has been high VC interest as well in this space. Most recently, i2iFunding , a Noida-based peer-to-peer lending startup raised Rs 5 crore led by SucSEED Venture Partners. In January, Spice Digital, a subsidiary of BSE-listed Spice Mobility announced that it would invest up to Rs 25 crore in Hyderabad-based T-Hub startup AnytimeLoan
The parallel in China throws up some stunning statistics; there are over 2, 500 P2P lending companies in China which do business to the extent of $120 billion.