Paytm’s loan distribution business jumps four-fold in Jan

By Malvika Maloo

  • 08 Feb 2023
Credit: 123RF.com

Fintech startup Paytm on Wednesday said its loan distribution business witnessed four-fold growth in January over the same period last year, with disbursements worth Rs 3,928 crore (nearly $480 million) last month. 

As compared to the previous month, the value has grown sequentially from Rs 3,665 crore ($443 million) loans disbursed in December.  

The company disbursed about 3.9 million loans last month, more than double of the number of loans it disbursed in January 2022, it said in an exchange filing. 

Paytm provides loans to its customers and merchant partners in partnerships with non-banking finance companies (NBFCs) such as Clix Capital, Aditya Birla Finance, Piramal Finance, Fullerton India and Hero FinCorp. It earns a commission based on the loans it issues to Paytm postpaid users and merchants. 

One of India’s biggest payments firm, which turned operationally profitable (on the basis of adjusted Ebitda) last quarter, has gained about 28% in the last five days, hitting the upper limit of 20% on Tuesday. The development comes as the firm, led by its founder Vijay Shekhar Sharma, has been trying to minimise its cash burn and achieve profitability through most of last year. 

The Noida-based firm said it has also expanded its user base reporting 89 million average monthly transacting users at the end of the month, up about 29% on a yearly basis. The number has grown from 85 million at the end of December 2022. 

It added another 0.3 million merchants for its payment devices subscription, taking the total to 6.1 million users. The fintech firm provides these devices or soundboxes to its merchant partners on a subscription basis. This business, while deriving subscription revenues and higher payment volumes, acts as a funnel for the company’s loan distribution business. 

Further, the gross merchandise volume processed by merchants on its platform grew by 44% on a year-on-year basis to Rs 1.2 lakh crore ($15 billion) in January. 

Paytm said over the last few quarters it has been focusing on payment volumes that generate profitability for us, either through net payments margin or from direct upsell potential. 

Operated by One97 Communications, it reported an Ebitda without accounting for employee-stock option costs, of Rs 31 crore over a revenue of operations of Rs 2,062 crore in the third quarter of financial year (FY) 2023, up 42% over the same period last year.  The company widened its consolidated loss to Rs 392.1 crore for the December 2022 quarter, compared to Rs 778.5 crore in the quarter before.