Digital payment company MobiKwik has announced the launch of a new service that will offer instant loans of Rs. 5,000 upon its request. The service, designed in partnership with Bajaj Finserv, is designed to target new credit customers (NTCs) as well as small business owners in the country, according to a statement from MobiKwik. A “new to credit” customer is someone who has no credit score and is generally ignored by most banks to sanction credit.
Previous reports suggested that for the assessment of borrowers’ credit, MobiKwik has developed its own model called “Mobiscore”, based on around 400 variables.
Long-standing entry into the lending space
This announcement, as we have pointed out earlier, was widely expected because the new KYC standards of the Reserve Bank of India leads to a dive in the use of mobile wallets and have impacted the core product of most payment companies. As such, MobiKwik has been seen to focus on building a lending business. It should be noted that, Bajaj Finance, the lending arm of the Non-Bank Financial Corporation (NBFC) Bajaj Finserv, purchased a 10.83% stake in MobiKwik for Rs 225 crores last year as part of a strategic agreement between the companies, which allows MobiKwik to offer loan services.
In addition, with the appointment of Vinayak N as the new head of lending activity at MobiKwik last month, almost confirmed the company’s foray into the lending space. Last month MobiKwik also invested Rs 2 crore in data science startup Pivotchain Solutions, which built proprietary AI and deep learning models for MobiKwik. MobiKwik said at the time that the model would help the payments company roll out numerous loan products to meet the credit needs of its user base. News reports have also suggested that the company is considering other lending products, in addition to rolling out investment products such as mutual funds.
To face the competition of Paytm
MobiKwik’s biggest competitor, Paytm, is also said to try to enter the lending space and apply for a central bank license to become a peer-to-peer lending platform.
Paytm Money, the wealth management arm of the payments company, is expected to begin operations as soon as the company receives approval from the Securities and Exchange Board of India (SEBI). It was reported that One97 Communications, the parent company of Paytm, will invest $ 10 million initially in the new branch of wealth management.