Paytm Expands Into SMB Lending


India-based mobile wallet firm Paytm generally focuses on consumer payments, but like PayPal, the company is beginning to turn its attention towards SME finance.

An announcement on Monday (July 11) said Paytm will begin lending to small businesses as it seeks to develop itself into a digital bank. The company offers unsecured loans to local merchants that use Paytm to accept B2C payments from their own customers.

“This is for all those who cannot get a loan from the bank because they do not have a credit profile,” explained Paytm Senior Vice President Kiran Vasireddy.

While many small businesses in India may not have a robust credit profile by traditional standards, Paytm reportedly aggregates the data from company usage of its digital wallet to generate a credit profile and determine how much to loan.

Vasireddy said Paytm is already lending to as many as 10 people a day. The annual interest rate is 12 percent, according to reports, and Paytm has plans to increase loan amounts in the future. The financing is made possible through partnerships with major financial institutions and nonbanks.

Alternative lending in India is experiencing a boom this year, with venture capital pouring into the space. Earlier this year, Capital Float raised $25 million, just one of several alternative lending startups that secured funding in the country.

In addition to small business lending, Paytm plans to introduce its own payments bank to the Indian market sometime this year. The firm revealed earlier this year a partnership with Wipro to help Paytm maintain accounting and regulatory compliance with its new venture.

Reports pointed to one of Paytm’s direct competitors, MobiKwik, which is also said to be working on the launch of its own small business lending operation.