Paytm Shuts Door on NBFC Licence After Payments Bank Blow

• Paytm has ruled out applying for an NBFC licence, citing preference for its existing partnership-based lending model

• Company reported a strong FY26 turnaround with ₹552 crore profit after a loss last year

• Growth driven by payments, merchant services and financial services distribution

Fintech major One97 Communications, the parent company of Paytm, has has ruled out the plans to apply for the Non-Banking Financial Company (NBFC) licence. During the company’s Q4 earnings call, President and Group CFO Madhur Deora said, "We are not super excited about going for an NBFC licence".

He explained that the company prefers its current model, which focuses on distribution, technology and merchant conversion rather than owning a lending balance sheet. Deora said Paytm focuses on building technology and insights that help merchants and customers, while partnering with large lenders.

He added that the company works with “blue-chip partners” who are better equipped to manage capital, risk and cyclicality, calling the arrangement a “win-win partnership.”

Focus Remains on Lending

Deora further said that Paytm’s approach to lending is built around partnerships rather than balance sheet expansion. He said the loan book, in his view, should be distributed across multiple partners rather than sitting with a single lender.

He also highlighted that the opportunity in payments remains large, supported by rising market share and low penetration. According to him, this creates significant near- to medium-term growth potential for the company’s core business.

It is worth noting that the Reserve Bank of India (RBI) in April cancelled the banking licence of Paytm Payments Bank Limited (PPBL) with immediate effect, more than two years after first restricting the lender from accepting fresh deposits.

The central bank said it will approach the High Court to initiate the winding-up process. Citing persistent non-compliance, the RBI said PPBL had failed to meet the conditions of its payments bank licence and had violated provisions of the Banking Regulation Act, 1949.

Strong FY26 Turnaround

Paytm reported a consolidated net profit of ₹184 crore for Q4 FY26, compared to a loss of ₹540 crore in the same quarter last year. Revenue rose 18.4% year-on-year to ₹2,264 crore, driven by payments, merchant subscriptions and financial services distribution.

For the full year FY26, revenue increased 22% to ₹8,437 crore, while EBITDA turned positive at ₹502 crore from a loss of ₹1,506 crore in FY25. Profit after tax stood at ₹552 crore versus a loss of ₹663 crore in the previous year.

The company said growth was supported by higher merchant adoption, a 27% rise in GMV, and a 46% jump in UPI transaction value. It also highlighted increasing use of artificial intelligence across engineering, fraud detection and merchant onboarding to improve efficiency and reduce costs.