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Regulatory scrutiny leads Paytm Postpaid to transfer its loan book to Clix Capital


It has been a month since Delhi High Court had issued a notice to Paytm Payments Bank (PPB) for operating a postpaid credit facility allegedly in contravention of law after a PIL filed in this regard by financial economist Abhijit Mishra.

The PIL had alleged that Paytm Payments Bank Limited is operating postpaid wallets in defiance of operating guidelines for Payments and Guidelines for Licensing of Payments Banks as issued by the Reserve Bank of India (RBI). Thus PPB is indulged in malpractice and violation of relevant banking acts, it further alleged.

What seems to be a possible fallout of this scrutiny, Paytm Postpaid is now reportedly transferring its loan book to non-banking finance company Clix Capital.

However, there is no clarity on whose financial book the loans were shown, said an ET report.

Currently Paytm Postpaid allows customers to recharge mobiles, book movie and travel tickets and also shop on Paytm and pay the following month at zero cost or interest. The facility is being offered to customers subject to verification of their creditworthiness as per the company’s assessment.

Paytm PostPaid started off in partnership with private sector lender ICICI Bank, primarily for pre-approved bank customers.

The partnership could not work due to some data issue, and Paytm was taking credit exposure on its own books, added the report.

Now, Paytm plans to leverage its partnership with Clix Capital to extend credit not only to its consumers but also its merchant partners.

Clix Capital offers credit for consumers and SMEs. Paytm partnership will enable it to expand its presence in the segment and consumer base. As per BS report, Clix Capital is in advanced talks with Paytm, for a strategic stake in its planned peer-to-peer (P2P) lending platform.

At present, as per RBI operating guidelines for PBs are only permitted to open savings and current deposit accounts. The accounts will be limited to Rs 1 lakh.

A payments bank is not allowed to extend credit. However, PBs may lend to their own employees out of the bank’s own funds.

The next hearing on the PIL is scheduled on September 3, where both Paytm and RBI will present their stand on the matter before the court.

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