India’s markets regulator SEBI has issued a show-cause notice to Paytm’s senior management over the timing of its December 2023 announcement to curtail small personal loans, amid ongoing RBI restrictions on consumer lending.
Paytm said its senior management has received a notice from India’s markets regulator over the timing of a December 2023 disclosure in which the digital payments group said it would curtail small personal loans after a central bank crackdown.
The Securities and Exchange Board of India issued the show-cause notice on Tuesday to the company’s key managerial personnel, including chief executive Vijay Shekhar Sharma and chief financial officer Madhur Deora, Paytm said late on Wednesday. They have 14 days to respond.
The issue centres on a statement Paytm made on December 6, 2023, when it said it would issue fewer personal loans of less than ₹50,000 after the Reserve Bank of India tightened rules on consumer lending. At the time, the company said the shift would reduce small-ticket postpaid lending by roughly half, while having limited impact on revenue and margins.
Business Standard reported then that Paytm planned to focus more on higher-value personal and merchant loans aimed at lower-risk, creditworthy customers. Other Indian business outlets said the strategy was expected to cut volumes in its small-ticket loan segment by about 40% to 50%, and that the move was intended to accelerate disbursements of larger loans through its platform.
Paytm’s lending pivot rattled investors at the time, with the company’s shares falling sharply after the announcement as brokerages trimmed earnings estimates. The latest regulatory notice adds a fresh compliance challenge for a company that has been under intense scrutiny since the RBI’s clampdown on unsecured consumer lending, a step that has forced several fintech and payments firms to reassess their credit businesses.
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