Mobile payments and commerce platform Paytm said it has tied up with financial institutions to facilitate collateral-free working capital loans of up to Rs 1 lakh for small merchants and service providers like General store owners and auto drivers.
The credit profile of the merchants, based on earlier transactions, will be used for screening process. The screening will be done by third-party financial institutions including Capital Float, Aditya Birla Finance and Capital First.
“Chances of getting a loan increases as the merchants’ usage of Paytm increases since there is more data available for underwriting,” said Kiran Vasireddy, senior vice-president at Paytm.
The move will help Paytm achieve its objective of tapping the under-banked and unbanked segments of the population and bringing the small retailers into the fold of organised credit.
Gaurav Hinduja, cofounder of Capital Float, said Paytm will pass a prepared offer to sellers it considers eligible for loans. The merchant will then be prompted to download the Capital Float app and apply for a loan. “For us, it opens a new segment of people and we plan to disburse loans sub Rs 50,000 through this tieup,” he said.
The merchant will then be prompted to download the Capital Float app and apply for a loan. “For us, it opens a new segment of people and we plan to disburse loans sub Rs 50,000 through this tieup,” he said.