Paytm, India’s leading mobile payments and financial services distribution company, will now expand its credit distribution business to offer higher-value personal and merchant loans to lower-risk and high credit-worthy customers, partnering with large banks and NBFCs, the company said in a business update.

This strategic move builds upon the strong performance and widespread acceptance of Paytm's existing loan distribution business. The company has added newer forms of loan offerings with a focus on driving a healthy portfolio for lending partners.

Recent macro developments and regulatory guidance prompted a recalibration of Paytm's portfolio strategy. In consultation with lending partners and prioritizing portfolio health, the company will reduce its focus on loans below ₹50,000, primarily of postpaid products. This segment will now represent a smaller portion of the overall loan distribution business.

Merchant loans, offered as business loans to MSMEs, will remain a key focus area. As these loans support small businesses, they are not impacted by the recent regulatory changes. By focusing on high-value, low-risk loans, the company aims to create a more sustainable and profitable lending business.

In an analysts call on loan distribution business, Paytm management said, “We are expanding our lender base. We are happy to inform you that we are adding two more NBFCs and one bank.” The management also noted that “None of the existing partners have stopped their business. We of course calibrate with each other.”

“We have a strong relationship with all 7 lending partners. We continue to thrive with each lending partner and continue to have stronger relationships by adding more. There is no shutting down of product or capital constraint of any kind,” Paytm’s management added.

"As the lending distribution business is maturing, we see newer opportunities of expansion to offer high-value personal and merchant loans," said a Paytm spokesperson. "We will continue to focus on originating the high portfolio quality for our lending partners, along with strict adherence to risk and compliance. We have seen great scale and acceptance for our loan distribution business, so we believe this expansion will further aid us to grow the business.” spokesperson further added.

Paytm continues to add banks and NBFCs as its lending partners for its loan distribution business.