Paytm has now turned its interest towards the flourishing market of alternative lending. As reported by Economic Times, India’s largest digital payments company is aiming to seek a license from the RBI to operate a P2P lending platform.
Documents filed with the Ministry of Consumer Affairs (MCA) state that Paytm’s board passed a resolution on February 7 “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.”
Sources claim Paytm is aiming to make use of its 7 Mn offline merchant base to gain a stronghold in the country’s peer-to-peer lending landscape.
Paytm has already started disbursing short-term, small-ticket loans to these offline merchants.
A source choosing to remain anonymous stated that Paytm has now started with short-term loans, they intend to extend it to large ticket sizes and also loans catering to the larger horizon.
Paytm had announced that it recorded a four-fold jump in its annualized gross transaction value (GTV) to $20 Bn (INR 1.3 Lakh Cr), up from $5 Bn in March 2017. The company currently registers over 1 Bn transactions per quarter with its entire suite of payments, commerce, and financial services products.
The Indian P2P Lending Market
India’s P2P lending industry is still nascent and has not more than 30 players viz. Faircent, LendBox, LenDenClub, IndiaMoneyMart, Monexo, Rupaiya Exchange, LoanBaba, CapZest, i2iFunding and many more.
In January, a number of these platforms came together to form the Association of P2P Lending Platforms. It was headed by i-Lend founder Shankar Vaddadi, with Faircent founder and COO Vinay Mathews acting as the Vice President.
The association is to work in conjunction with the government and regulatory authorities on matters of compliance in P2P lending. Ultimately, the objective is to promote the cause of financial inclusion in the country.
The RBI had released a list of directives pertaining to the registration and operation of NBFC-P2Ps in a draft, titled “Non-Banking Financial Company – Peer to Peer Lending Platform (Reserve Bank) Directions, 2017” in October 2017.
The new guidelines mandated a $307K (INR 2 Cr) capital requirement for all P2P lending companies so that the companies interested in P2P lending game have a strong economic background.
Additionally, these companies must ensure that the aggregate exposure of a lender to all borrowers at any point in time across all P2Ps does not exceed $15,351 (INR 10 Lakh).
Similarly, the country’s central banking institution also placed a cap of $15,351 (INR 10 Lakh) on the total amount that can be borrowed at any point in time across all P2Ps. Further, a single investor is allowed to lend only $767.5 (INR 50,000) at any given point in time.
Predictions say that the Indian P2P lending market is to grow into a $4 Bn-$5 Bn industry by 2023.
Although relatively young compared to the established markets in China, the US and Europe, has been growing at a tremendous pace, post the institution of regulations by the RBI. Its growth will surely receive a major boost if a significant digital payments platform like Paytm decides to enter the space.
Also Read: Shekhar Sharma, PayTM CEO Becomes The Youngest Indian Billionaire At The Age Of 38!
