Paytm to offer small-ticket loans under BNPL model

Fintech startup Paytm said on Monday it will now offer loans starting from Rs 250 to Rs 1,000 as part of its buy now, pay later service, Paytm Postpaid, in addition to credit up to Rs 60,000.

The small-ticket loans will be interest-free for up to 30 days and can be used at online and offline merchant stores across the country.

The service will be offered in partnership with Aditya Birla Finance Ltd, a non-banking financial company, and can be used to pay for expenses such as mobile and DTH recharges, gas cylinder booking, electricity, and water bills, among others, Paytm said.

"We want to help new-to-credit citizens start their credit journey and develop a financial discipline.. Our new Postpaid Mini service helps users manage their liquidity by clearing their bills or payments on time," said Bhavesh Gupta, Paytm Lending's CEO, in a press statement.

BNPL has been gaining a lot of steam in the credit sector, with more and more people accessing loans digitally. Digital loans generally are less paper or documentation-intensive, and credit is available almost instantly which makes it more appealing to the masses.

Personal loans have also seen an uptick with the COVID-19 pandemic causing salary cuts and job losses, pushing people to take out small credits to meet their daily expenditures. Whereas banks offer a minimum credit line - starting at lakhs of rupees - BNPL players are able to offer smaller loans, that too on an as-needed basis, which makes repayments easier for the borrower.

Paytm's Postpaid service has seen several takers who appreciate the ease with which the loans are dispensed. Postpaid Mini - the new service - can be used to pay at thousands of petrol pumps, Kirana shops, pharmacies, as well as chain outlets such as Reliance Fresh, along with ecommerce websites and offline retail stores.