This also comes at a time when a PIL was filed in the Delhi HC last month alleging Paytm Payments Bank was flouting regulatory norms by offering credit to its users.

Regulatory fallout at Paytm Postpaid Company moves its loan book to Clix Capital
Atom Digital Payments Tuesday, June 25, 2019 - 09:55

Paytm appears to fall foul with regulations time and again. The company is now in trouble with its online credit business, Paytm Postpaid. There is no announcement of this officially, but Economic Times reports that the company has transferred the loans that it had offered to its customers to the books of Clix Capital, an NBFC based out of Gurugram. Observers feel that this transfer has been done due to the regulatory requirements.

Paytm Postpaid is just a product; the account books were reportedly in the name of Paytm Mall, the ecommerce business. There is already litigation being faced by the group’s Paytm Payments Bank for giving out loans. The petition claims the payments bank was flouting the licence norms laid down by RBI. A payments bank is not permitted to lend money. It can only accept funds for deposit and that too only up to a maximum of Rs 1 lakh.

Paytm Postpaid is positioned differently, more on the lines of some of the credit products offered by other ecommerce entities. Paytm Postpaid allows borrowers up to Rs 60,000 and repay later with the first 37 days being allowed to be enjoyed free of interest. Though not explicitly stated, Paytm was trying to facilitate customers on its ecommerce platform, Paytm Mall, make their purchases without worrying about the payment part.

The case in the Delhi High Court is in the form of a PIL and the Court has taken it on record and asked the company and RBI to respond.

The issue appears to have arisen out of the arrangement that Paytm had with the ICICI Bank on offering these loans. ICICI Bank customers who made transactions on the Paytm Mall site could apply for the loan facility and based on the bank’s assessment of the applicant’s creditworthiness, the amount would be sanctioned. The matter would have ended there since ICICI Bank is a banking entity and no regulatory issues there as well. The issue arises when there are customers with no relationship with ICICI Bank. There is no information on what went wrong here. According to one report, there is a data-sharing issue between the bank and Paytm. For the record however, the FAQ section on Paytm Mall site continues to claim that the credit is being offered by the ICICI Bank.

To those customers who sought the credit, Paytm might have released the funds from its resources and reflected in its books. Once the PIL hit the Court, it might have decided to shift the liability to the books of Clix Capital. As mentioned, there is no official confirmation on this.

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