India’s leading payment and financial services company, Paytm, has received positive news from research firm Macquarie following its Q4 FY24 results. According to Macquarie, Paytm’s loan disbursements rebounded to Rs 20 billion in April 2024, a significant recovery from the Rs 9 billion recorded in February 2024 due to regulatory issues affecting its associate entity.
The report highlights, “Profitability remains under pressure due to the impact of RBI regulations. However, loan disbursements, which had dropped to Rs 9 billion in February 2024, have increased to Rs 20 billion as of April 2024. For Paytm’s continued success, strong support from the lending ecosystem is crucial, and this will be a key area to monitor.”
Paytm reported a 48% year-on-year growth in its loan distribution business, reaching Rs 52,390 crore in FY24. The company is shifting its focus to a distribution-only business model, moving away from the previous model that included collection incentives. Paytm anticipates long-term stabilization of rates around 3-3.5%, according to the report.
In its earnings release, Paytm noted that distribution-only loans continue to perform well, and it has added more lending partners, including pilot programs with banks. “This type of loan accounted for the majority of consumer loans this quarter and is our key focus due to its larger Total Addressable Market (TAM), greater interest from large banks and non-banks, easier tech integration, and clearer regulatory guidelines,” the company stated.
Amid industry concerns about the deterioration of asset quality for personal loans, Paytm is targeting prime and super-prime customers, offering them a superior user experience and competitive interest rates. This segment is more price-sensitive, potentially leading to lower take rates as a percentage of disbursal value for Paytm.
Regarding Merchant Loans, Paytm’s group CFO Madhur Deora commented, “The loan segment has seen significant recovery since January. We adopt a conservative approach if there are concerns about potential asset quality deterioration. Our focus remains on maintaining high asset quality.”
By transitioning its core payment business from PPBL to other partner banks, Paytm aims to reduce risks and create new long-term monetization opportunities by leveraging its strong customer and merchant engagement.
