Paytm expands collateral-free loans of up to Rs. 500,000 for micro-merchants

India's leading fintech services provider Paytm said today that it aims to disburse Rs 1,000 crore in loans to MSMEs by March 2021, nearly double from Rs. 550 crore in the last financial year which benefitted over a lakh merchant partner.

Reaffirming its commitment towards the growth of MSMEs, Paytm also announced the expansion of collateral-free loans of up to Rs. 500,000 at a low-interest rate and unique daily EMI product customized for micro-merchants.

"We continue to offer collateral-free loans under the "Merchant Lending Program" in Paytm for Business app. Our algorithm determines the credit-worthiness of the merchant based on his daily transactions and arrives at a pre-qualified loan offering. We have digitized the entire process starting from the loan application, approval to disbursal with no additional documents required in partnership with NBFCs and banks," Paytm wrote in a blog post.

Paytm says it is committed to driving financial inclusion across India, adding that it is on a mission to provide instant credit to those who do not have access to loans from the traditional banking sector due to a lack of collateral or credit score. In line with its commitment, the fintech giant recently launched "Next Generation Credit Cards" and Personal Loans for "new to credit" customers.

"With our collateral-free instant loans, we are trying to help Kirana stores other small business owners who have been left behind by the traditional banking sector and do not have easy access to loans and credit. Going forward, we will especially focus on EDC merchants and provide higher loan amounts based on their EDC transactions," said Bhavesh Gupta, CEO, Paytm Lending.