One97 Communications-owned Paytm has partnered with Piramal Capital & Housing Finance to expand the distribution of merchant loans and drive the financial inclusion of MSMEs by bringing better access to credit to small businesses and retailers. This partnership will grow Paytm’s loan distribution business, supported by Piramal Finance’s network of over 309 branches across India. 

Digital payments company Paytm has acquired many merchants across the country. Piramal Finance plans to leverage this base to offer finance to small business owners through data-driven underwriting and credit sanctions based on business income. 

Additionally, this partnership will be expanded soon to include personal loans, where Piramal Finance brings its understanding of risk and customer segment. The latter plans to be present in 1000 towns and cities in India through its multi-product retail lending platform and phygital strategy.  

Paytm will allow new-to-credit merchant partners to avail of loans of up to Rs 10 lakh with a tenure of six to 24 months to meet their capital requirements. It plans to enable a digital onboarding process with minimum documentation.

Paytm claimed it had witnessed a high volume of repeat merchant loans on its platforms, with over 50 per cent of the total value of loans disbursed to merchants who had taken a loan earlier. It has also seen an increase in the average ticket size of the loans.

Bhavesh Gupta, CEO of lending and head of payments at Paytm, said, “We continue to see rapid growth across all our lending products, where we empower MSMEs from smaller cities and towns with access to digital credit. The success and scale of our lending products give us the confidence to expand and further boost our credit offerings.”

Jairam Sridharan, managing director, Piramal Capital & Housing Finance, added that since many merchants are loyal Paytm customers, this partnership will bolster its proposition through a mix of technology and a network of branches located in tier-II and tier-III towns. “Our ability to underwrite this segment and collect in local markets, coupled with Paytm’s digital access to this base, we believe we can offer compelling lending solutions,” he added.