Paytm is betting big on its online lending business and looking to turn it into a major revenue stream

Since a payment bank is not authorized to lend, the company is considering the possibility of obtaining an NBFC license.

Fintech startups getting into lending have become the norm rather than the exception. One of the oldest players in this sector, Paytm, now wants to develop its lending business and would like to obtain an NBFC license for this, reports Economic Times.

For now, the company has partnered with Clix Capital (formerly GE Money Financial Services), to offer loans or deferred payment options to its customers. Paytm customers can make unlimited payments through their QR code-based payment system and continue to make refunds over a period of time. The current arrangement with Clix Capital was more in the form of a lawsuit. When scaling up, the business can tap into more NBFCs to unlock the loans. Paytm will eventually apply for and obtain a license to operate as NBFC.

Paytm is under pressure, as previously reported, to cut its losses and start making a profit. Lending activities can definitely help the business to generate revenue and profit.

The advantage of Paytm lies in the 15 million strong users of its application in the country. Being one of the first digital wallets, the company took full advantage of the demonetization exercise in 2016. This large captive customer base will be useful in the lending industry. The company is already in the process of providing leads to NBFCs for loans. There are 1.5 crore merchants who have signed up with Paytm.

The company already has its Paytm Payments Bank, but payment banks are not allowed to lend under RBI standards. Payment banks have now approached RBI to transform into small banks. If it comes from the loans and the income generated from these loans will accumulate on the books of One97 Communications, the parent company.

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