As fintech firm Paytm rebuilds its business, a general view in the leadership is that the firm should refrain from doing licensed business that falls directly under the probe of the regulatory bodies. This is as per a report by the Economic Times.
At least initially, Paytm reportedly plans to stop focusing on ventures that need a license. Instead, it will shift to a distribution model to drive its future growth, the report adds.
Speaking to the Economic Times, a source said, “We have the reach and brand recall; the focus is to partner with others and use our tech to distribute products better aimed at our consumers and merchants.”
Read: Paytm Employees File Complaint with Ministry Over Alleged Unlawful Termination: Report
Further, Paytm won’t reportedly focus on re-applying for licenses in the non-banking finance, insurance, or asset management industries. Paytm recently withdrew its application for an insurance license with the Insurance Regulatory and Development Authority of India (IRDAI).
Instead of focusing on cross-border payments, the fintech firm will focus on e-commerce via the Open Network for Digital Commerce (ONDC), according to the report. Recently, Paytm launched an auto-rickshaw booking feature via ONDC. The feature reportedly went live for people in Bengaluru, Chennai, and the National Capital Region (NCR).
This development comes after the Reserve Bank of India imposed restrictions on Paytm Payments Bank for persistent non-compliance with KYC practices. Since then, the bank has stopped offering basic banking services and is dependent on third-party operators.
In March this year, the National Payment Corporation of India (NPCI) gave approval to the fintech firm to act as a third-party application provider (TPAP) via a multi-bank model. The banks for the same include the State Bank of India, HDFC, Axis, and YES Bank.
However, a Paytm spokesperson has reportedly denied any changes in their business strategy. Speaking to the Economic Times, the source said, “The information from your source suggesting otherwise is false and misleading. During our investor call, we have reaffirmed our commitment towards our core business lines, including payments and financial services, which remain regulated.”
After the report, in a statement, a Paytm spokesperson said, "There is no change in our business strategy. We continue to focus on our regulated payments and financial services business, the information from your source suggesting otherwise is false and misleading. During our investor call, we have reaffirmed our commitment towards our core business lines, including payments and financial services, which remain regulated."
The spokesperson further added, "As part of our business model, we not only engage with leading financial institutions across distribution of credit, insurance and wealth products but also continue to co-innovate on newer product lines with them, under regulatory supervision. At present, there remains a large base of customers and merchants, which remains untapped as we look to offer them with financial products. We do not see any impact as there is no change in our plan of action.”
