Paytm borrows Rs 300cr from ICICI Bank

Paytm borrows Rs 300cr from ICICI Bank

Online payments and commerce platform Paytm has taken a loan of close to Rs 300 crore from ICICI Bank in two tranches, a move that analysts say reflects the slowdown in venture capital (VC) investing.

Just last week, India's largest online marketplace Flipkart disclosed that it had secured a credit line of Rs 450 crore from HDFC Bank by pledging fixed deposits. In the last few months of 2015 too, Flipkart had pledged assets to access credit facilities worth Rs 1,400 crore from Kotak Mahindra Bank and Deutsche Bank.

When contacted, Paytm founder Vijay Shekhar Sharma told TOI, "This is a treasury management move for working capital. While adequate funds are there, it is advised by our finance teams to get these credit lines for working capital on the back of security such as FDs (fixed deposits), mutual funds, etc, in order to conserve cash."'

An email sent to ICICI Bank, the country's largest private sector lender, did not elicit a response till the time of going to press.

According to the latest documents filed by Paytm with the Registrar of Companies (RoC), the company has pledged cash assets as security with the bank. Last year, Paytm had taken a small loan of Rs 15 crore for working capital requirements from HDFC Bank which has been repaid by the Noida-based company, RoC documents show.

Paytm, which is backed by Chinese e-commerce major Alibaba, started as an online payments platform but later started its own commerce platform, where it competes with the likes of Flipkart, Snapdeal and Amazon. Though the payments business is operationally profitable, the commerce platform is burning cash. Paytm is now gearing up to launch a payments bank, which would require additional capital. The company is hoping to garner fresh equity funds for this.

Source:BankingUpdates