No Bank Would Lend His Father Two Lakh Rupees
Vijay Shekhar Sharma built Paytm, lost his banking licence to the RBI, and took twenty-six years to arrive at a rule about money that was painted on his own front door.
Somewhere in the middle of the nineties, in Aligarh, a schoolteacher needed two lakh rupees for his daughter’s wedding and the banks would not give it to him.
He was the only earning member of a family of six and he lived on a government teacher’s salary, which on paper makes a man the safest sort of borrower there is. Permanent job, monthly salary, pension at the end. He had no collateral of the kind they wanted and no papers of the kind they asked for, so they said no, one after another, and the family did what lakhs of Indian families do when the banks have finished with them, which is to borrow privately at whatever rate is going. Nobody writes those terms down. That is rather the point of them.
I do not know what was painted on the front of that particular house or on the doors of the offices they knocked, asking for a loan. In most houses and private office spaces of that sort, every Diwali, two words go up on either side of the door, and they are Shubh Labh. Auspicious gain. They go up again at the front of the new account book on the day the old year’s ledger is closed, and they have been going up in this country for longer than anybody can properly date.
So here is a family being refused money by every institution in town, with the oldest surviving instruction about how money should be handled painted on its own doorframe, in a language everyone in the house can read.
That is the thing I want to get at. Not the refusal. The gap between the two.
His son was in college in Delhi while this was happening. That son is Vijay Shekhar Sharma, and it took him twenty-six years to arrive at what was written on the door, and he arrived at it the expensive way, in public, by losing things.
Twenty-four per cent
He had come to that college out of a Hindi-medium school, quick enough to finish early and get into Delhi College of Engineering at around fifteen, and then he sat in the lecture halls and could not follow a word, because the teaching was in English and his English was not yet up to it. He went to the library and worked through the textbooks with a dictionary until he could keep up, in the evenings, after attending classes he had not understood during the day. He has told this story often and never dressed it up.
He started One97 Communications in 2000, which was more or less the worst year of the century to start an internet company. The crash arrived almost immediately. There were months when he could not pay salaries or the rent on an office that was barely a room, and to keep it breathing he borrowed at twenty-four per cent interest, from private lenders, for exactly the reason his father had gone to private lenders. No bank wanted him either.
Twenty-four per cent. Hold that number for a minute, because Kautilya has something to say about it.
The Arthashastra sets out rates of interest in its third book, and they are not one rate. An ordinary loan carries about fifteen per cent a year. Money for a commercial venture, sixty. Money lent to traders who must cross forests, a hundred and twenty. Money lent to those who go by sea, two hundred and forty. Read as history that is a curiosity. Read as a lending policy it is a credit model, and a rather good one, because the rate climbs with the danger of the borrower’s journey rather than with the thickness of his file. A man taking a wooden boat towards Southeast Asia might not come back, and the price of his money says so. A neighbour borrowing for a household expense pays the cheapest rate on the list.
Underneath it sits an assumption we have quietly dropped, which is that the lender is supposed to know what the borrower is actually doing.
Now put the father back in. A schoolteacher with a permanent job, twenty years of salary slips and a wedding in front of him is the neighbour. He is the fifteen per cent case, the safest name in the whole scheme, and he was charged something closer to the rate for crossing an ocean by men who knew he had nowhere else to go. His son, running a genuinely risky internet company in the year the internet collapsed, was arguably the sea trader, and paid twenty-four per cent, which was cheaper. The system had the two of them the wrong way round.
Nobody in that story needed to be told this. It is in a text that Indian universities teach and Indian bureaucrats quote at conferences. It simply had no bearing on what happened in Aligarh, because knowing a rule and having anybody willing to apply it to you are separate matters.
Demonetisation, and the thing that ate the reason for the wallet
One97 survived on work nobody writes case studies about. It sold services to telecom companies, the caller tunes and ringtones and news alerts that used to arrive on everybody’s phone, and there was steady money in it for a decade. In 2010 he took a large slice of that cash and put it into a website where you could top up your mobile, which some people inside the company thought was a waste. The website was Paytm.
Then, on the evening of the eighth of November 2016, the government withdrew most of the country’s cash overnight, and for about two years he was the luckiest man in Indian business. The wallet had around 125 million users before that evening, 185 million three months later, 280 million a year after that, and by March 2021 the company counted 333 million customers and over 21 million merchants.
What nobody said loudly at the time was that the same year had produced UPI, which was public, free, built by an institution the banks themselves owned, and very good. For a while the two coexisted. Then UPI ate the reason for having a wallet at all, his included, and his own payments moved on to those public rails like everybody else’s. Which left him with an enormous brand, a third of a billion users, and a payments business earning close to nothing per payment.
The company listed in November 2021. Eighteen thousand three hundred crore rupees, the largest offering India had seen, priced at ₹2,150 a share. It opened below that on the eighteenth and closed the day about twenty-seven per cent down, so a retail investor who had bought into the biggest IPO in the country’s history was a quarter poorer by dinner.
I have no useful opinion on whether the pricing was greedy or merely optimistic. The part that matters here is that a company with hundreds of millions of users had not worked out where its money was going to come from, and on a Thursday afternoon the market said so in front of everybody.
The order the purusharthas are written in
Which is the second rule arriving late and by force. Our tradition gives a human being four aims, and the order is the instruction. Dharma, right conduct. Artha, wealth and the means of getting it. Kama, desire and its satisfaction. Moksha, release. Artha is on that list without apology, and this civilisation never taught that money is dirty or that a trader is a lesser creature than a renouncer. But it is second, and dharma is first, and what the sequence says is that you settle the boundary before you begin rather than patching it on afterwards with a donation and a photograph.
Build the earning first and find out later whether it was allowed, and you get November 2021. Or you get what came next.
He had, by then, done something about the money problem, or thought he had. Paytm ran a payments bank. Not a full banking licence, which the Reserve Bank has never given to a company like his and shows no sign of giving to anyone, but a restricted one that let it hold deposits up to a limit and run accounts and wallets and FASTags.
On the thirty-first of January 2024 the Reserve Bank told that bank to stop.
The order followed an external audit which the regulator said showed persistent non-compliance and continued material supervisory concerns. From the end of February the bank could take no fresh deposits and no top-ups into any account, wallet or FASTag. The date moved to the fifteenth of March so people could get their money out. One day before that deadline the company’s UPI handle was shifted to Yes Bank, so that millions of small merchants would not wake up on a Friday to dead payments.
The company put the cost at three to five hundred crore rupees, which turned out to be optimistic. In the quarter ending December 2024 its income was down by almost a third against the same quarter the year before, ₹2,999 crore falling to ₹2,017 crore.
A man whose father could not borrow two lakh rupees from a bank built one, and a regulator switched it off.
Damdupat
And the third rule was already there too, the plainest of the lot. Our law of debts contains a principle called damdupat, which says the interest recoverable at any one time can never exceed the principal. However long the loan runs, whatever it compounds to, however frightened the borrower becomes, the lender cannot take more in interest than the sum he handed across. This is not a pious sentiment from a devotional text. Indian courts have applied it, and judgments from recent decades still argue about which states it covers.
Look at what it accepts before it restricts. Lending, interest, the lender being paid for carrying risk. Then one hard line at the exact point where the borrower has nothing left to defend himself with, and no further.
We have spent the last few years watching what happens where no such line exists. People borrowed two thousand rupees from an application on their phone and owed eleven thousand by the time the recovery calls reached their relatives, and a regulator has been shutting those operations down one circular at a time, rebuilding by administrative order something this civilisation had settled and written down a very long time ago.
What he did after the bank was taken away
What he did after the bank was taken away is the least dramatic part of the story, which is why it gets retold the least.
He stopped trying to be the place where money is kept. Paytm now earns almost nothing from payments, and the payments are simply the reason a person opens the application. The money comes from what can be honestly sold to somebody whose financial life the company can see. Loans, distributed for lenders who carry the risk. Insurance, distributed for insurers. Card machines and soundboxes rented to shopkeepers. Subscriptions.
In the financial year that ended this March, the company made a profit for a full year for the first time. ₹552 crore, against a loss of ₹663 crore the year before, on revenue of ₹8,437 crore.
Which is the door. That is what Shubh Labh means when you take the two words seriously. Nobody paints only Labh. The gain is asked to be auspicious, and the people who built that custom took it as too obvious to argue about that profit arrives in two varieties and only one of them belongs on the front of a house where children sleep. A business family that closes its books once a year and puts them in front of the household is asking a question no board meeting asks, out loud, in the same room as the people whose name is on the shop. This is the same ground Oh Money In This Too stands on.
He took twenty-six years and two public demolitions to get to a revenue model his own doorframe could have described in two words.
Standing, not wisdom
So the question I actually want to put down is why that took so long, and whether the twenty-six years were wasted.
I do not think they were, and the reason matters more than anything else in this essay.
Knowing a rule and having the standing to act on it are different things.
Picture him at twenty-five, in that one-room office, unable to pay the rent. He knows about damdupat. Every educated Indian knows roughly that our tradition disapproves of usury. Now imagine him saying so to the lender charging him twenty-four per cent. Imagine his father saying it to the men in Aligarh. The rule does not care whether you have read it. It only operates if somebody with power agrees to be bound by it, and neither of them had anything with which to make that happen.
The tradition hands you the map at birth, in your own house, free. It does not hand you the authority to walk the road. That gets bought, and it is expensive, and in his case the price was a wallet business destroyed by public infrastructure, a listing that fell twenty-seven per cent in an afternoon, and a bank switched off by the regulator in a single order.
What he has now that he did not have at twenty-five is not better information. It is a position from which the information can be used. He can build a lending business under caps because he has the scale to make caps survivable. He can turn down revenue and have it read as discipline rather than weakness. He can say no to something profitable and nobody assumes he could not have managed it.
That is what the failures bought. Not wisdom. Standing.
Three things at once
Which brings this round to whoever is reading it in Raipur or Warangal or Siliguri, wondering what a listed company in Noida has to do with them.
He began in Aligarh, out of a Hindi-medium school, with a father who could not raise two lakh rupees from anybody respectable. What he understood that nobody in a metro business school understood was what being refused feels like from the inside, and he spent twenty-six years building for people whom banks say no to. That was his one asset at the start that could not be copied, and it is still, I would argue, the thing separating him from several better-funded companies that came and went while he was being knocked down.
You have the same asset, whatever the equivalent is in your town. And you have the map, in your house, for nothing.
What has changed, and changed only in the last year or so, is the third piece. The tools that write software crossed some threshold around December, and a founder in a small city can now rent the same capability as a funded team in California for the price of a monthly subscription. The rails underneath are Indian, public and free to build on. In August this year UPI carried 24.51 billion transactions worth ₹29.82 trillion, none of it routed through a company in another country, and all of this is happening while the dollar’s share of world reserves has slid from seventy-two per cent in 2001 to a little over fifty-seven, while India settles trade in rupees with twenty-two countries, and while UPI runs in seven more. The single road with the toll booth is becoming several roads.
So a young founder in a small Indian city now has all three at once, possibly for the first time. The map, which was always in the house. The terrain, which is your own life and your family’s. And the tools, which arrived this year and cost almost nothing.
He had two of the three for twenty-six years and it nearly killed the company four times.
You have all three. Do not take as long as he did.
The only miracle in the world is you standing on your own two feet.
Hari Om Tat Sat.
Arjun is a 30-year practitioner in the Bihar School of Yoga tradition. He founded OMJOOMSUH in 2022.
Related
Shubh Labh · Purusharthas · Four Dharmas · Kama · Sanatan Dharma · Oh Money In This Too · Young Businesses and AI · The Three 3.0s · The Fourth Room
Sources
- Aligarh, the Hindi-medium schooling, his father as sole earner, the struggle with English at Delhi College of Engineering, the loans at 24 per cent, and the two lakh rupees for his sister’s wedding, as described in interviews: NewsX; Secret Diary of an Entrepreneur; Outlook Business.
- One97 from 2000, the telecom services business, and Paytm’s launch as a recharge site in 2010.
- Wallet growth through demonetisation and the counts by March 2021: Euromoney.
- The November 2021 IPO and the 27 per cent fall on listing day: TechCrunch; Chittorgarh.
- The RBI order of 31 January 2024, the deadlines, the handle moving to Yes Bank, and the revenue fall: Outlook Business; MediaNama.
- FY26 results, first full year of profit: Paytm investor relations.
- The dollar’s reserve share, rupee settlement with 22 countries, UPI abroad, and UPI’s August 2026 volume: IMF; ORF; Business Standard.
- The rule of damdupat: Only Twice as Much, Williams College.
- Kautilya, Arthashastra, Book III, on the recovery of debts.