Bengaluru: The Delhi High Court has asked for clarifications from the Reserve Bank of India and Paytm on how the digital payments company is allegedly offering a credit product when it isn’t allowed to operate as a payments bank.The notices were issued by Chief Justice Rajendra Menon and Justice Brijesh Sethi on a petition filed by economist Abhijit Mishra, as reported by the PTI.
The petitioner alleged that Paytm’s Postpaid product, offered to its wallet users, contravened central bank norms for payment banks, which state that they cannot extend loans or credit facilities to consumers.
The petitioner sought punitive measures against Paytm Payments Bank in this regard. Emails sent to the RBI and Paytm Payments Bank went unanswered till the time of going to press.
Paytm launched its Postpaid product in early 2019, offering select consumers a spending limit and time till the following month to pay the amount.
“The problem is that it looks as if the credit amount sits in the books of Paytm whereas in this case, it is with a partner lender (a bank or an NBFC),” said a senior banker aware of the matter.
Paytm, backed by SoftBank and Alibaba, spelt out on its website that credit is offered by ICICI Bank for Paytm customers and that it only acts as a facilitator for the service.
“The sole discretion to approve Paytm Postpaid rests with ICICI Bank. The decision by ICICI Bank is based on parameters such as transaction history on Paytm, user’s credit history and ICICI Bank’s internal policies,” Paytm said in the frequently asked questions segment.
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