In response to the Reserve Bank of India’s (RBI) risk-weight directive, One97, the company behind the Paytm brand, has announced a significant reduction in postpaid loans and small-ticket personal loans below Rs 50,000. The company is set to concentrate its efforts on expanding the availability of larger-ticket personal loans and business loans.
The strategic adjustment in the portfolio origination strategy, particularly for the postpaid loan product below Rs 50,000, was communicated to investors on Wednesday. This decision reflects considerations of recent macro-developments, regulatory guidance, and discussions with lending partners.
The primary objective of this strategic shift is to maintain a healthy loan portfolio, ensuring a balanced and sustainable lending business. Consequently, the postpaid loan product will see a reduced presence in the company’s loan distribution business moving forward.
The lending landscape has witnessed changes due to the RBI’s decision to increase capital requirements by 25%, resulting in higher costs for small-ticket personal loans. The impact of this regulatory change is particularly notable in the sub-Rs 50,000 segment.
As Paytm adapts its loan strategy to align with regulatory changes, the company aims to strike a balance between compliance and sustaining its lending business.
