One97 Communications, which is the parent company of Paytm, has recently pledged all of its mutual fund investments and current assets to ICICI Bank. This will help Paytm borrow up to a total of Rs.1,400 crore from the lender. The company is borrowing the sum from ICICI Bank to meet its working capital needs.
On January 18, ICICI Bank and Paytm entered into an agreement under which the entire current assets of One97 Communications, which were worth Rs.7,085.1 crore as of 31 March 2018, were hypothecated to the bank in order to increase the company’s borrowing capacity. Until recently, the firm could only borrow up to a maximum of Rs.400 crore for its working capital needs from ICICI Bank.
The increased borrowing limit can help the company secure funds for its everyday operations. The company may also use the funds to finance its growth plans, which include entering new markets overseas and online-to-offline retail businesses.
At the World Economic Forum that was held at Davos, Mr. Madhur Deora, the Chief Financial Officer of One97 Communications, said Paytm is considering entering developed markets in the year 2019. The company has been focusing on expanding its various businesses over the past 1 year.
On October 22, Paytm launched PayPay, which is a barcode-based payment service for smartphones, in Japan. The payment service was launched in a partnership with Yahoo Japan Corp and SoftBank Group Corp. Earlier this year, the company acquired NightStay, which is a hotel booking app that allows users to instantly book hotels.
Paytm, which was founded by Mr. Vijay Shekhar Sharma as a payments entity, currently allows users to invest in mutual funds, make hotel bookings, shop, etc., through its platform.
Sources: Livemint, The Economic Times