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India’s largest private bank ICICI Bank has entered the instant micro-credit segment. Experts feel this would help bring more credibility and trust and, at the same time, expand the market by bringing in more competition.
ICICI Bank has entered into a partnership with e-commerce and mobile wallet company Paytm to offer small interest-free loans up to ₹20,000 to customers who are common to both Paytm and the bank.
The product, ‘Paytm-ICICI Bank Postpaid’, a first of its kind in the country, will enable customers to get access to instant credit for common purchases such as movie and flight tickets, and to make bill payments.
Talking to newspersons via a conference call on Thursday, Anup Bagchi, Executive Director, ICICI Bank, said that the product is intended for lakhs of new consumers who don’t have any credit history or have just entered the workforce and hence, are looking for small loans to upgrade their lifestyle.
Lately, dozens of start-ups such as Kisst, happyloans, Krazybee and Smartcoin have come up targeting the pay-day loans or micro loans.
Paytm-ICICI Bank Postpaid is a digital credit account that can be opened instantly on Paytm’s website without any need of submitting physical documents. The loan can be applied on Paytm’s website on its “pay later” feature.
No joining fees There are no transaction, joining or hidden administration fees. However, several data points, including the purchase history and financial and digital footprint of the customer, are looked at before offering the loan.
For now, the loans are being offered to only ICICI Bank account-holders but soon it would be extended to customers of other banks, Bagchi said, adding that the bank is also looking at similar partnerships with other major e-commerce platforms and mobile wallets. “This can be looked at as a private online credit card,” Bagchi said, adding that there is no restriction on the number of loans as long as the customer repays on time.
Available on all days at any time with a quick checkout with an Paytm Passcode, the credit will remain interest-free for 45 days, after which the bank will charge 3 per cent interest per month.
He further added that the credit limit for a customer is set after a consolidated bill is generated on the first day of the next month, which has to be paid by the 15th day of the same month.
Customers can use their Paytm wallet, debit card or internet banking of any bank for easy repayment of their dues.
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