Paytm, the country’s largest digital payments company, is trying to enter the lending space and is seeking a licence from RBI to become a peer-to-peer lending platform.
According to documents sourced by ET from the Ministry of Corporate Affairs, the company moved a board resolution on February 7 saying it intends to “carry on the business of non-banking financial company — peer-to-peer”.
Industry sources told ET that the company could have also applied for a licence to the central bank and it could already be under consideration, which could not be independently verified by ET. However, RBI is yet to release the names of the entities which NBFC P2P category and is said to have received multiple applications. Paytm had not commented till the time of going to press.
Though the company’s exact plans around peer-to-peer lending could not be determined, but in its filings to the ministry, it said, “To carry on the business of NBFC-P2P lending platform as an intermediary to provide the services of loan facilitation via web or app medium or otherwise…”
Multiple industry insiders said that for a company like Paytm, the move to lending is the next logical step. Sources close to the company pointed out that Paytm is trying to leverage the 7 million strong offline merchant base it has garnered and is already giving out small-value short-term loans to them.
Sources close to the company have also pointed out that Paytm is trying to leverage the 7-million strong offline merchant base it has garnered and is already giving out small value short-term loans to them. Since the company does not have a lending licence it is doing it through NBFC partners, they said.
“They will be starting with short-term loans and the intent is to extend it to large ticket sizes and also loans catering to the larger horizon. Obviously the first step is to start by releasing small value loans and this will be extended to other financial products too including insurance, going forward,” said the person mentioned above.
If Paytm manages to get the licence, it could be one of the first among the prominent startups to enter the P2P lending space and could create huge challenges for players such as Faircent and others which have created a niche business in P2P lending already.
One of the founders of a P2P lending startup said on the condition of anonymity that multiple Chinese investors have already started showing interest in the P2P lending space in India and could be looking to invest into or buy out a licence holder.
Incidentally, reports suggest that China had almost 2,500 such P2P lending platforms last year with the total industry being about $120 billion in size, till the government started clamping down on them.
While the industry has faced massive criticism because of frauds and mismanagement, it has emerged as one of the most lucrative lending businesses globally.
