PayTM Increases Its Micro-Credit Foray

At a time when the other companies are shying away from providing microcredit, PayTM is all set to harness the increased credit demand. The Softbank and Alipay backed, India’s most valued FinTech company PayTM has tied up with non-banking lenders Arthimpact Digital Loans and Clix Capital to extend into the digital lending market while the other more traditional are reluctant to take risks because of the stress in various the consumer segments that was caused due to the lockdown which was imposed because of the global pandemic.

The company will leverage the transaction data of its users to assign them a credit limit for purchasing daily goods and will also be valid for its customers that shop on PayTM Mall, Its e-commerce venture. The elite customers will get a limit of up to INR 1 Lakh. The company has plans to enter the space for the long term and plans to offer the service to most of its active users over the next couple of years in stages. The company has been expanding its Financial services portfolio by offering insurance partnerships, providing value-added services to its merchants, etc.

As per RBI policies, the PayTM Payments Bank will only be able to apply for a licence to convert into a small finance bank only in 2022. The eligible customers will be chosen using a machine learning model that will leverage the rich transaction data within the ecosystem of the company itself. While the company does not plan to charge any activation fee or annual fee, monthly convenience charges will be levied by the user of postpaid services. The company is looking at the situation as an opportunity to grow in the space.

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