Flipkart enters personal loan business; offering Rs. 5 lakh credit
What's the story
E-commerce giant Flipkart's interest in finance has been growing steadily as it has now ventured into personal loans.
The company has partnered with Axis Bank to provide a credit line of up to Rs. 5 lakh to its customers. Flipkart's new financing venture is expected to boost its sales.
It is considered the beginning of Flipkart's desire to create a marketplace for loan products.
Context
Why does this story matter?
India's personal loan segment is crowded. Despite that, credit penetration in the country is still low.
With its loan product, Flipkart aims to change that. The company's active user base of over 300 million people could be the driving force behind that.
It also has a wealth of data, which can help it provide loan products that cater to the needs of Indians.
Loan
Customers to get loans without any documents
Flipkart launched its loan product quietly a few days ago. It was first spotted by The Arc.
The loan does not require the submission of any documents. The company is offering a 30-second approval time.
The e-commerce giant has expanded its finance portfolio with loans. It already offers "Buy Now, Pay Later" and a co-branded credit card.
Verification
How will Flipkart determine creditworthiness?
To determine the creditworthiness of a customer, Flipkart will use different sets of data, reported The Arc.
On one hand, it will use a customer's CIBIL score, which is based on a person's payment record and credit history. This is a common practice by many lenders.
Flipkart will also take into consideration a person's purchasing behavior to ascertain eligibility.
Boost
Flipkart aims to boost revenue with new offering
Flipkart's primary target is customers who are new to credit. The company believes a financing option will improve transaction volume and customer loyalty.
Credit options can boost spending as they promote staggered payments. Flipkart aims to leverage the confidence its customers have in the platform to promote its loan product.
The new offering could compensate for the firm's slowing e-commerce business.
Information