Paytm PB’s ripple effects on its Filesadmin.co; loans, merchant subscriptions swayed
Paytm’s businesses, from loans to merchant subscriptions, are feeling the impact of the Reserve Bank of India (RBI) cracking down on Payments Bank, a unit of the fintech major.
Paytm on Wednesday reported a 54 per cent year-on-year (Y-o-Y) decline in total loans disbursed in its financial results for 2023-24 (FY24).
The company gave loans worth Rs 5,799 crore in the fourth quarter (Q4 FY24), a 53.8 per Y-o-Y decline from Rs 12,554 crore in Q4 FY23. Sequentially, disbursements were down 62.6 per cent from Rs 15,535 crore in Q3 FY24.
The company paused new loan disbursements when lending partners, non-banking financial companies and banks sought clarity about RBI’s action.
Merchant loan disbursements were at Rs 1,671 crore in Q4 FY24, a 27.8 per cent decline from Rs 2,313 crore in Q4 FY23. Sequentially, disbursements decreased 53.3 per cent from Rs 3,579 crore in Q3 FY24.
The number of merchant loans disbursed decreased to 0.08 million in Q4 FY24, from 0.14 million in Q4 FY23, but the average ticket size increased to Rs 2,05,000 from Rs 1,70,000 a year ago.
“Going forward, we are also expanding by offering larger ticket business loans through a distribution only model where the lender is responsible for collections. For the loans where we do distribution as well as collections, we are going to remain cautious even on merchant loans, to avoid any asset quality deterioration beyond our partners’ thresholds,” said Paytm in its earnings release.
On the lending front, the company distributes two types of loans. One, where the company distributes loans and engages in collection activities, and second, where it only distributes these loans.
The company has decided to pause the disbursement of small personal loans where it engages in operations such as distribution and collection.
Similarly, on the personal loans and post-paid loans front, the company recorded a decline in the last quarter.
Post-paid loans, the firm’s buy now, pay later (BNPL) offering, has recorded a steep decline in the past few months. On a YoY and QoQ basis, it decreased by as much as 90 per cent to Rs 720 crore in Q4FY24.
This is in line with the company’s decision to reduce the disbursement of small-ticket size loans, specifically those less than Rs 50,000, after the banking regulator tightened norms for such loans last year. It completely paused such disbursements in February this year.
Meanwhile, the disbursement of personal loans has declined only by 1 per cent on a Y-o-Y basis to Rs 3,408 crore in Q4FY24 from Rs 3,447 crore in Q4FY23. Sequentially, personal loan disbursements declined 23.6 per cent from Rs 4,460 crore. ATS increased to Rs 1,40,000 from Rs 1,30,000 on a Y-o-Y basis.
Paytm had about 10.7 million merchant subscriptions as of March 2024 for its “soundbox” device, a segment it pioneered. It added some 1.2 million merchant subscriptions for the first three quarters in FY24 but in Q4 it added 0.1 million. Attrition was higher in February and March.
Merchant subscriptions are up 58 per cent from 6.8 million it recorded in Q4 FY23.
Paytm expects merchant subscription revenue to increase to Rs 100 per device, per month, by Q4FY24. It expects the revenue to bottom out at Rs 80 in the ongoing quarter (Q1FY25) from the existing Rs 90 per device, per month.
“Subscription revenue was also impacted due to lower new merchant addition (resulting in lower revenue from device deployment incentive and set-up fees), lower active device merchants and temporary rental waiver for ring fencing certain cohorts of merchants,” it said.
First Published: May 22 2024 | 8:13 PM IST