Paytm has decided to scale down the proportion of its unsecured loans below Rs 50,000 following the tightening of rules on consumer lending by the Reserve Bank of India (RBI).

The digital payments company will now seek to expand its portfolio of high-ticket personal and commercial loans to lower-risk and high-credit-worthy customers. 

"Postpaid loans is a portfolio which is predominantly under Rs 50,000. On the back of the macro developments and regulatory guidance, we have decided to keep scaling the Postpaid loan down," Bhavesh Gupta, president and chief operating officer of Paytm, told analysts over a conference call on Wednesday.

As of 30 September 2023, post-paid loans accounted for 55% of the total loans distributed by the company. 

Paytm’s total value of disbursed loans stood at Rs 16,211 crore, up 9% sequentially.

The impact of the reduction of postpaid loans on Paytm's revenue growth would be minimal, said Gupta. 

As of 30 November, 70–73% of Postpaid loans were below the Rs 50,000 mark. Under Paytm's personal loan product, such low-ticket loans accounted for 3–5%.

Paytm's post-paid loans include consumer credit, provided to customers as a 'buy now, pay later' product.

"As the lending distribution business is maturing, we see newer opportunities of expansion to offer high-value personal and merchant loans. 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," Paytm said.

On 16 November, the RBI raised risk weights on unsecured personal loans and credit card loans for banks and non-banking financial companies (NBFCs) by 25 percentage points. 

“Paytm was fast transforming from a payments-focused company to a loan distribution-focused company. The key question to ask is what proportion of its overall customer base would Paytm ultimately be able to convert into loan customers in the long-run,” said Shivaji Thapliyal, Head of Research and Lead Analyst, Yes Securities.

Paytm has seven NBFCs as partners for lending. It plans to add one banking partner and two NBFC partners.