Paytm Boosts FGTPL Stake to 82.6%, Approves ₹90 Crore Loan Guarantee

One 97 Communications, the parent company of digital payments giant Paytm, is increasing its ownership in subsidiary First Games Technology Private Limited (FGTPL) to 82.6%. This is achieved by converting a ₹197 crore loan into equity. Paytm has also approved a ₹90 crore Default Loss Guarantee (DLG) for loans distributed through its platform via lending partner Piramal Finance. The stake conversion is expected to finalize by April 30, 2026.

Key Board Approvals

One 97 Communications, Paytm's parent company, announced on April 16, 2026, that its board approved a significant transaction for subsidiary FGTPL. The company will convert an existing loan of about ₹197 crore, plus interest, into FGTPL equity. This conversion will increase Paytm's stake in FGTPL from its current 55% to 82.6% on a fully diluted basis. The transaction is expected to be finalized by April 30, 2026. Simultaneously, Paytm agreed to a Default Loss Guarantee (DLG) of up to ₹90 crore for Piramal Finance. This DLG will cover potential losses on loans disbursed by Piramal Finance via Paytm's platform, aiming to enhance its loan distribution model.

Strategic Rationale

This move highlights Paytm's strengthened commitment to FGTPL and its strategy for growing its loan distribution business. Gaining a larger stake aims for increased control and future returns from FGTPL. The DLG commitment shows Paytm's growing role in facilitating credit, as it assumes some default risk to boost loan volumes and partnerships. This approach supports Paytm's broader goal of expanding financial services and revenue beyond its core payments business, particularly as digital lending regulations evolve.

FGTPL's Business Shift

FGTPL previously operated in India's online real money gaming (RMG) sector. However, this business was discontinued following new regulations, including the Online Gaming Act, 2025, which banned online money games. Paytm is now increasingly focused on its lending distribution business. It uses models like the First Loss Default Guarantee (FLDG) to partner with NBFCs and banks. This strategy allows Paytm to cover a portion of the credit risk, encouraging lenders to increase loan disbursals via its platform and boosting revenue from distribution fees.

Impact on Paytm

Paytm's equity in FGTPL will rise significantly from 55% to 82.6% on a fully diluted basis. The company faces direct financial exposure up to ₹90 crore from the Default Loss Guarantee for Piramal Finance loans. FGTPL's focus is likely to shift from its former gaming operations to supporting Paytm's wider financial services or other strategic goals.

Potential Risks

FGTPL's core business, online real money gaming, has ceased operations due to a regulatory ban, suggesting possible shifts in the subsidiary's direction or value. The ₹90 crore DLG exposes Paytm to financial risk if loans disbursed by Piramal Finance default. Paytm has also faced regulatory attention, with SEBI warnings on related-party transactions and settlements involving executives for alleged securities law violations, which could point to ongoing compliance issues.

Industry Context

Paytm operates in the digital payments and financial services sector alongside rivals like PhonePe and Mobikwik. PhonePe is also shifting towards loan distribution and preparing for an IPO, having similarly exited revenue streams like Real Money Gaming due to regulatory actions. India's ban on online money games has heavily impacted the gaming sector where FGTPL operated, leading major brands like Dream11 and Flutter's Junglee Games to withdraw.

Looking Ahead

Investors will monitor the finalization of the FGTPL loan conversion by April 30, 2026. They will also evaluate the performance and financial impact of the ₹90 crore Default Loss Guarantee on Paytm's loan distribution business. Key factors include FGTPL's future operational focus within the Paytm ecosystem and any further regulatory changes affecting India's digital lending sector.