One97 Communications, Paytm’s parent company, has given up on the NBFC license and will instead work with lending partners, not its own funds. This decision comes after the Reserve Bank of India (RBI) took action against Paytm Payments Bank and at the same time as Paytm has become profitable and had strong income growth, making the possible gains and risks for investors clearer.
Strategy: doubling down on partners
Madhur Deora, President and Group CFO, said on the call about the fourth quarter’s results that they aren’t seeking an NBFC license. Management believes this way is good for everyone: Paytm will manage how things are sold, the technology, and getting payments from customers, and well-known lending partners will provide the funds and deal with the risks and ups and downs of the economy.
Paytm also pointed out that a very large number of people still don’t fully use digital payments, and Paytm is getting a bigger part of that market. Because of this, they believe they have a good chance to grow in the near and medium term without having to put more of their own money into lending or actually making the loans themselves.
Regulatory overhang: context that shapes risk
Last month, the RBI cancelled Paytm Payments Bank’s license to operate as a bank because it hadn’t followed the rules and acted in a way that was harmful to people who had money in the bank. The RBI said the bank didn’t meet the requirements of being a payments bank.
One97 Communications said in an official statement that it doesn’t have any connection to Paytm Payments Bank and had already written off its investment in it as of March 31st, 2024. Not getting an NBFC license protects their money while the whole group is more closely watched by regulators and focuses on growing through payments.
Earnings momentum and capital-light scaling
For the three months ending March 2026, Paytm made a total profit of 183 crore rupees, which is a change from a 545 crore rupee loss a year before. Total income from what they do went up 18.4 percent to 2,264 crore rupees, from 1,912 crore rupees in the three months ending March 2025.
For the entire financial year ending March 2026, the total profit was 552 crore rupees, as opposed to a 663 crore rupee loss in the financial year 2025. Total income for the year grew 22.2 percent to 8,437 crore rupees, compared to 6,900 crore rupees in the financial year 2025.
This return to profit makes the idea of growing by using lending partners to take on the risk of bad loans even more sensible. However, how much growth happens with credit products will depend on how much risk the partners are willing to take, and how well Paytm distributes and collects payments.
Key signals for investors
Here are the takeaways investors are likely to track:
– No NBFC plan reduces direct credit and regulatory capital risk.
– Partnerships remain central to lending growth and cyclicality management.
– Payments market is large with rising Paytm market share.
– RBI action elevates compliance focus across the group.
– Profit and revenue growth provide execution headroom.
Why this stance could endure
The company stressed that growth in payments and the fact that not many people are using them yet provide a lot of opportunity to expand without putting their own money at risk. By letting partners manage the money and the risk, Paytm can put its money into improving their products, getting them to more customers, and collecting payments, making sure everyone is working towards the same goals and not tying up their own money in the lending process.
This also reduces the chance of problems with loans affecting the company, which is important with regulators watching closely. The quality of how they do things, instead of how much money they spend, will be the main way to grow.
What comes next
How well they do will be measured by how efficiently they distribute things, how well they collect payments using technology, and how the partners’ loans perform. A change in the lending partners they use or how carefully they check borrowers could affect growth, but it won’t change the risk to Paytm’s own money.
It’s still important to know what will happen to Paytm Payments Bank after the RBI’s actions, as this will impact how people feel about Paytm. For now, management is saying the same thing: increase payments, get to more customers, and use top lending partners – not an NBFC license – to satisfy the demand for credit.
