Digital payments unicorn Paytm has announced its partnership with a non-banking financial company (NBFC) Clix Finance to enable digital loans for both its customers and merchants.
According to a company statement, Paytm will avail these loans to Paytm customers and merchants in the mode of deferred payment or postpaid and merchant lines facilities.
“We have seen an overwhelming response to Paytm postpaid and merchant lending products. With this partnership, we aim to bring our credit tested algorithmic lending products to a larger customer and merchant base,” said Nitin Misra, senior vice president of Paytm.
Further, founder and chairman of Clix, Pramod Bhasin said, “Together, we will co-create many unique and customised products that will work seamlessly to address unmet financial needs of millions of customers.”
Earlier last month, Paytm was reported to be in partnership talks with the Gurgaon-based SME lending platform Clix Capital, which is a subsidiary of Clix Finance.
Delhi NCR-based Paytm was founded by Vijay Shekhar Sharma in 2010. Initially launched as a digital wallet company, the company has since then expanded into multiple verticals including ecommerce (Paytm Mall), online payments, mutual funds (Paytm Money), and had also launched its own Payments Bank in 2017.
The fintech major had been facilitating short-term loans to some merchants on its platform through company’s tie-ups with the NBFCs (Non Banking Financial Company).
Digital Lending In India
As per Inc42 DataLabs, the credit demand in India is projected to be worth $1.41 Tn by 2022. The estimated growth rate in credit demand is 3.73% between FY17 and FY22.
This $1.41 Tn opportunity has led to the growth of multiple lending startups in the country including LendingKart, PerkFinance, Aye Finance, ETMONEY, LazyPay, and Shubh Loans, among others.
The prevalence of digital lending startups in India has opened new opportunities for synergies between fintech startups and established financial institutions and banks. For example, Indifi, a lending startup, has partnered with Edelweiss Retail Finance. In other similar cases, traditional financial institutions have partnered with fintech startups to leverage their technology platforms and data or expand the addressable market by tapping users of fintech products.
Between 2015 and Q1 2019, the total investment in Indian fintech startups was $7.62 Bn with a total deal count of 478. Out of the total funding, 50.13% or $3.82 Bn was in payments tech startups, followed by 25.49% ($1.94 Bn) in lending tech startups, according to Inc42 Datalabs.