Paytm halts postpaid loans, to focus on distribution-only model
Paytm has paused its distribution of postpaid loans completely since February, signalling a notable shift in its lending approach.
The value of postpaid loans distributed plunged over 90% to Rs 720 crore in the March quarter of FY24, from Rs 7,496 crore in the previous quarter, as per the company’s quarterly earnings release.
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Offering CollegeCourseWebsiteIndian School of BusinessProfessional Certificate in Product ManagementVisitIndian School of BusinessISB Product ManagementVisitIIT DelhiCertificate Programme in Data Science & Machine LearningVisitThe firm collaborates with both banks and non-banks to distribute and collect loans, earning distribution commissions and collection bonuses in the process.
Paytm said it was becoming more cautious with its small-ticket size personal loans business, given the deteriorating asset quality.
In a post-earnings analysts call, founder and CEO Vijay Shekhar Sharma said that on the personal loans side, the company will not disburse collections-based loans unless it is incentivised to do so through collections bonuses.
The company also said that in the March quarter, the majority of personal loans disbursed were through a distribution-only model, where the collection is done by the lender.
Paytm emphasised that it would focus more on these loans going forward. This, however, will compress the company’s take rates, or commissions it makes from distributing these loans, in the 3-3.5% range.
“Given industry asset quality
