Paytm Postpaid, the online credit business of the digital payments major Paytm, is transferring its loan book to Gurgaon-based non-banking finance company Clix Capital, in what could possibly be a fallout of regulatory scrutiny, people familiar with the development said.
While there is no exact clarity on whose financial book the loans were shown, one of the sources told ET that it was taken in the books of Paytm Mall, the ecommerce entity of Paytm.
This comes at a time when in a parallel development a public interest litigation was filed in the Delhi High Court last month alleging Paytm PaymentsBank was flouting regulatory norms by offering credit to its users.
Paytm Postpaid is a credit offering through which customers can buy goods and services and make settlements later, similar to how credit cards and other Pay Later products work. The platform allows consumers to borrow up to Rs 60,000 and offers free credit period of 37 days.
As per the Reserve Bank of India rules, a payments bank is not allowed to extend credit and can accept deposits only up to Rs 1 lakh.
Taking up the PIL, the Delhi High Court had asked for responses from both Paytm and RBI.
Paytm PostPaid started off in partnership with private sector lender ICICI Bank, primarily for pre-approved bank customers who are Paytm users.
The partnership either fell through or was not being extended to new users, and Paytm was taking the credit exposure on its own books, two people in the know of the matter told ET.
However, in its ‘Frequently Asked Questions’ section meant to explain the service to the users, Paytm still says applications might get rejected because of data mismatch or credit policies set by ICICI Bank. “Credit is being offered by ICICI Bank for Paytm customers. Paytm is acting as a facilitator for the services,” it says.
E-mails sent to Paytm and ICICI Bank for comment remained unanswered as of press time Sunday. An emailed query sent to Clix Capital and messages sent to its director Anil Chawla, too, did not elicit any response till press time.
“While the deal was struck for existing bank customers who were to be offered the postpaid facility, for non-ICICI Bank customers the product could not work since there were issues around sharing of consumer data on either sides,” said one of the persons cited earlier.
The other source said partnerships between internet giants like Paytm and traditional lenders get stuck at the point of sharing of customer data. “With such huge user base, new-age tech companies will eventually become competitors to banks as they foray into lending,” the person said.
Ride-hailing company Ola also offers a credit product, Ola Money Postpaid, which allows users to take rides and then pay only after 15 days. ET had reported in its January 21 edition that Ola had applied for a non-banking lending licence from the RBI.
Going forward, Paytm plans to leverage its partnership with Clix Capital to extend credit not only to its consumers but also its merchant partners, another person in the know said. “Paytm had been extending small credit to its merchant partners as a pilot, but going forward it will become an important offering to them which will help them expand their scope of business as well and in turn accept more payments through Paytm,” he said.
Clix Capital – started by Genpact founder Pramod Bhasin and former head of GE Capital’s commercial business Anil Chawla with support from AION Capital – offers credit for consumers as well as small and medium enterprises. The partnership with Paytm will help it expand its presence in these segments and shore up its customer base.
Alibaba and Softbank-backed Paytm is in the process of expanding its scope of operations beyond simple payments, having already forayed into mutual funds, stock trading, and ecommerce. But for lending it has to lean on a partner since the RBI’s payments banking licence prohibits it from foraying into lending directly.
With its partnership with Clix, Paytm will be able to start lending to its consumers as well as merchant partners, the sources said.