Financial service platform Paytm on Monday announced its decision to double loan disbursements from Rs 550 crore in last fiscal year to Rs 1,000 crore by March 2021. The company plans to provide collateral-free loans of up to Rs 500,000 at a low-interest rate and unique daily EMI product customized for micro-merchants.
The merchants can avail these collateral-free loans through the ‘Merchant Lending Program’ in Paytm for Business App. The creditworthiness of a merchant is assessed by the algorithm of daily transactions and this evaluation gives a pre-qualified loan offering.
Loan repayment is primarily collected from the merchant’s daily settlement with Paytm and there are no prepayment charges on these loans. In the last financial year, over 1 lakh merchants benefited from this service, with Paytm processing loans worth over Rs 550 crore. The entire process is digitised starting from the loan application, approval to disbursal with no additional documents required. Paytm had recently launched Paytm All-in-One Android POS device that has created the facility for over 2 lakh MSMEs to accept all payment modes, including Paytm Wallet, all UPI based apps, Debit & Credit Cards and ‘Cash’.
Paytm bank is not yet allowed to lend according to RBI, and the lending operations were conducted in partnership with various NBFCs and banks.
Earlier in 2018, Paytm partnered with Clix Capitals to disburse loans. Bhavesh Gupta, CEO – Paytm Lending said, “With our collateral-free instant loans, we are trying to help Kirana stores & other small business owners who have been left behind by the traditional banking sector and do not have easy access to loans and credit. Going forward, we will especially focus on EDC merchants and provide higher loan amount based on their EDC transactions.”
Paytm claims to have 50 percent of market share in merchant payments and also gives a tough competition to likes of Khatabook with its Paytm for Business app where merchants can track payments instantly, track settlements and access past collections record, all through one interface.
