Paytm halts postpaid loans, to focus on distribution-only model

Beleaguered fintech company 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.

The 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 deterioration for small-ticket personal loans, accordingly we will not receive a collection bonus on existing books of personal loans and postpaid loans and have decided to pause these products till credit cycle plays out,” the firm said in its earnings release.

“Since we do not expect to do personal loans with collections or postpaid loans in the near future, and we do not expect any collections bonuses on the existing postpaid loans or such personal loans, the collections data on existing books is not relevant,” it added.

This shift follows the regulatory crackdown by the Reserve Bank of India on Paytm Payments Bank, resulting in a halt in its business on March 15.

The company has not disbursed any postpaid loans since February. However, the cumulative distribution of merchant and personal loans in the first four months of 2024 amounted to Rs 7,087 crore.

In December 2023, ET reported that Paytm was adopting a cautious approach towards small-ticket loans, scaling down its buy-now-pay-later (BNPL) product Paytm Postpaid, and shifting focus towards large-ticket personal loans and merchant loans.