Payments services and e-commerce firm Paytm, in association with ICICI Bank, will be offering micro-loans to its wallet-users soon.
The firm, which received final approval of the Reserve Bank of India to formally launch its own payments bank, will be offering micro-loans between INR 5,000 (US$77) to INR 20,000 (US$308), sources close to the development, told Techseen.
The service is expected to start in a month’s time. The loan amount will be disbursed by ICICI Bank and will be credited to the Paytm wallet.
The eligibility for the loan will be decided on the basis of transaction history, particularly electricity and mobile bills payment.
The Alibaba backed One97 Communication, which operates the Paytm platform had first showed intent of offering personal loans in September last year. “While small ticket loans in the INR 5,000-10,000 range will be approved in 30 minutes, the bigger sized loans of about Rs 200,000 would take a day or two for disbursal, Krishna Hegde, VP (Business), Paytm, had told Times of India at that time.
Paytm Founder Vijay Shekhar Sharma had in February announced this year that it had reached 200 million wallet users. “Next milestone, 500 Mn by 2020,” Sharma had tweeted. He said that the company was adding 700,000 users per day; and that the total balance in the Paytm wallets stood at INR 8.99 billion (US$134.777 million approx).
Paytm rival Mobikwik, in association with consumer-lending marketplace, CashCare, already had done a pilot of offering micro-loans from INR 500-INR 2,500 to about 25,000 users in April-May last year.
For the record, ICICI Bank, last week tied up with Truecaller, to allow Truecaller users to make P2P payments.
Loans to merchants
Paytm started offering collateral-free working capital loans — anything between INR 50,000 and INR 20 million — for merchants on its platform, in July last year. It had tied up with with financial institutions such as Capital Float, to offer loans to merchants such has retail stores, auto and taxi drivers and milk cooperatives based on their payments history.
The interest rates vary from 12% to 24%.
Paytm is closely following the model of its largest investor Alibaba. The Chinese conglomerate committed to invest $177 million in the company in February this year. A week later, it bought the 1% stake held by Reliance Capital in Paytm for $41.2 million (INR 2.75 billion).
“It is amazing that in China they (Alibaba Group Holding and Ant Financial Services Group) disburse billions of dollars of loans,” One97 Communication founder Vijay Shekhar Sharma, had told The Economic Times, as early as December 2015. “We have learned that model can work here. That is why we are excited about it and will continue with it.”