Paytm Crisis: Non-Bank lenders said to explore options for loan disbursal

Indian non-bank lenders are looking at options other than Paytm for loan disbursal, worried about the regulatory crisis engulfing the firm that has led to a temporary halt of lending services, sources with direct knowledge of the matter said.

Paytm's banking unit on January 31 was hit by a central bank order to wind down its business due to persistent non-compliance with rules and a day later Paytm said it would not be originating loans for "maybe a couple of weeks" to resolve operational challenges.

If Paytm's lending partners were to distance themselves from the company, that would be a further major blow to the app.

Loan distribution fees contributed close to a fifth of Paytm's revenues in the latest quarter, analysts have said.

While non-bank lenders have not terminated their contracts with Paytm, sources said that they have no visibility as to when they might be able to resume lending through the Paytm app.

The executive was one of three sources at the non-bank lenders who said that options were being explored.

They were not authorised to speak to media and declined to be identified.