PPBL 'at farm' length from One97 Comm, don't need incremental customers for credit biz growth: Sharma

New Delhi: Paytm Payments Bank Ltd and One97 Communications Ltd (OCL) are two different companies which operate not just at arm's length but "at farms" length, a top official of Paytm said on Saturday.

In response to a question on the impact of the RBI banning Paytm Payment Bank Ltd (PPBL) from onboarding new customers, Paytm founder and CEO Vijay Shekhar Sharma during the company's second-quarter earnings call said that the company does not need incremental customers for the growth of credit business. "Paytm Payments Bank Limited and Paytm, which is OCL, are two very different companies not just at arm's length, I call it farm length now. The approach here is of a completely clear understanding that whatever Paytm Bank does is for its good and for their business plan," Sharma said. PPBL is a group company of Paytm in which it holds a 49 per cent stake.

However, Paytm books show PPBL as an associate of the company and not as a subsidiary. Sharma said Paytm acquires consumers for various consumer payment products and then serves the merchants. "For our credit business to grow, we actually do not need incremental consumers on our platforms. It is rather better for us to farm the current customers and penetrate on them instead of acquiring new consumers," Sharma said.

Paytm has reported a narrowing of consolidated loss to Rs 291.7 crore in the second quarter ended September 30, 2023, compared to a loss of Rs 571.5 crore in the same period a year ago. The consolidated revenue from operations of the company increased by about 32 per cent to Rs 2,518.6 crore during the reported quarter from Rs 1,914 crore in the September 2022 quarter. Paytm's revenue for financial services and others grew 64 per cent YoY to Rs 571 crore in the reported quarter. The number of loans distributed through Paytm grew to 1.32 crore, an increase of 44 per cent YoY, while the value of loans distributed more than doubled to Rs 16,211 crore on year-on-year basis. During financial year 2022, RBI directed PPBL to stop the onboarding of new customers with effect from March 11, 2022. During FY'2023, RBI appointed an external auditor for conducting a comprehensive systems audit of the Bank and in October 2022, PPBL received the final report thereof from RBI outlining the need for continued strengthening of IT outsourcing processes and operational risk management, including Know Your Customers etc at PPBL.

RBI recommended remediating action steps to be taken by PPBL in a time-bound manner to which the banks claim to have complied. RBI recently levied a penalty amounting to Rs 5.39 crore on PPBL and has not yet lifted the bar from the payments bank on onboarding of new customers. Sharma said that old customers on Paytm platform are better placed to get credit disbursed from the firm's lending partner compared to a new consumer who would have a very small footprint on the platform. In response to the question impact on the competitive landscape with the entry of Google Pay and Jio Financial Services, Paytm President and Chief Operating Officer Bhavesh Gupta said that the entry of Google Pay or any other new player will expand the market and make business more robust. He said that it would be too early to say anything about Jio Financial Services as it has very little information about the kind of work they plan to do.