Paytm, a major player in digital payments, has decided to avoid pursuing businesses that require regulatory licences, according to a report by The Economic Times. This strategic decision comes in the aftermath of regulatory actions earlier this year that impacted its banking entity.
Paytm’s leadership has opted to build its business primarily through a distribution model rather than seeking licences directly under regulatory purview.
Furthermore, the firm has chosen not to reapply for licences such as non-banking financial company (NBFC), insurance, or asset management businesses. Additionally, experiments in cross-border payments, regulated under the Payment Aggregator Cross-Border (PA-CB) licence, will be halted.
Instead, the company plans to leverage its extensive reach and brand recall to partner with licenced entities and enhance product distribution for consumers and merchants.
The focus has shifted towards a distribution-led model for personal loans, where Paytm facilitates distribution while licenced lenders handle collections.
Paytm streamlines operation amid regulatory actions
Regulatory actions earlier this year, including restrictions on its banking services through Paytm Payments Bank Ltd, prompted Paytm to re-evaluate and streamline its operations.
Paytm reported annual sales of Rs 17.4 billion for the financial year ending March 2024 in its marketing services business.
Billionaire founder-CEO Vijay Shekhar Sharma last month reported the company’s first-ever decline in sales on record and promised to reduce its non-core assets. Sharma also warned of job cuts following the fallout from regulatory action taken by the RBI.
The company aims to navigate its recovery phase by focusing on core strengths and strategic partnerships, particularly within the digital commerce space through initiatives like Open Network for Digital Commerce (ONDC).
Paytm’s shift away from regulated businesses underscores its strategy to mitigate regulatory risks and refocus on areas of strength and partnership-driven growth in the evolving digital economy landscape.
First Published: Jun 28 2024 | 11:39 AM IST