Mumbai: Paytm has launched a new vertical — Paytm Lending — to distribute personal loans to customers through its app. Paytm said that the new service is built on its tech platform, which enables partner banks and non-banking financial companies (NBFCs) to process loans end to end in less than 2 minutes. The company has said that it aims to have a million users by the end of March 2021.
The creation of the lending vertical has happened even as the group’s banking arm — Paytm Payments Bank — has applied to convert itself into a small finance bank. Payments banks are not allowed to extend loans, but can seek conversion into a small finance bank, which can provide retail credit after meeting timelines prescribed by the regulator. Although the loans will be on the books of the bank or finance company, Paytm will manage the process end to end.
“We aim to make instant personal loans accessible to the self-employed, new-to-credit individuals and young professionals who need short to medium -term personal loans to manage urgent expenses so that lack of resources does not come in their way to fulfil dreams and ambitions. Our aim is to become a growth enabler for India’s aspiring youth and young professionals to help them become self-reliant. We will continue to innovate and digitise as many services that help in bringing ‘new-to-credit’ users into the formal economy,” said Paytm Lending CEO Bhavesh Gupta.
The move comes at a time when the government and regulators are cracking down on unregistered and unregulated app-based lenders. The company had recently extended its Paytm Postpaid service (a ‘buy now, pay later’ feature) to a large set of use cases, such as payments at neighbourhood kirana stores and popular retail destinations.
Additionally, it has also been extended to various bill payments facilities available on Paytm, shopping on Paytm Mall, and online payments at internet apps such as Domino’s, Tata Sky, Pepperfry, HungerBox, Patanjali and Spencer’s.