PayNearby, Centrum Microcredit Team On SMB Loans

PayNearby, which describes itself as “India’s leading branchless banking and digital payments network,” and Centrum Microcredit Limited, which is owned by The Centrum Group, have teamed up to offer unsecured loans to retailers, the companies announced.

The companies said in a prepared statement posted by the website Equity Bulls: “As part of the tie-up, loan requirements will be sourced through PayNearby’s vast network of retailers and will be disbursed by Centrum Microcredit Limited. The solution is aimed at fortifying and driving the business growth of PayNearby’s retail partners, especially in these challenging times where businesses are struggling to stay afloat due to the economic fallout of COVID-19.”

The rationale for the product put forth by the companies is that retailers often need small short-term working capital.

“More often than not, due to lack of collateral or being new to credit, these retailers predominantly rely on alternative options such as local moneylenders or loan sharks instead of mainstream options such as banks or financial institutions. But, loans from these informal sources come at exorbitantly high interest rates, pushing them further into an inevitable vicious cycle,” the item in Equity Bulls states.

Loans will be worked out by PayNearby but backed by Centrum, according to the statement.

Centrum, according to the statement, will benefit from the opportunity to “harness PayNearby’s rich data acquired through processing billions of transactions per day, adding scale and efficiency to their lending business.”

Lending decisions to merchants will be based on scorecards and clear disqualification criteria, according to the companies.

The companies stated that loan turn-around time is about 24 hours.

Anand Kumar Bajaj, founder and chief executive of PayNearby, said in a prepared statement: “PayNearby as an entity has been championing the cause of financial inclusion in the country. However, the objective of financial inclusion is incomplete until our retailers get access to credit. We have given our retailers access to livelihood, access to insurance and access to savings with various products in the financial services spectrum. The only missing piece was access to credit. In our endeavor to make credit available to our retailers at affordable interest rates, we have partnered with Centrum Microcredit Limited. Along with PayNearby’s substantial data, together with Centrum, we are hopeful of addressing the issue of working capital credit for our retailers through these micro-enterprise loans.”

Prashant Thakker, executive director and chief executive of Centrum Microcredit, said: “Financial inclusion is a key focus area for us. Our partnership with PayNearby adds to our vision of making a positive social and economic impact in the lives of retailers by providing unsecured working capital credit to ensure their business functions uninterruptedly. With this initiative, we will be able to bring many small retailers into the mainstream credit fold. This will also help us to diversify our operations geographically and expand our offering in terms of tenure and repayment model of loans.”