PayNearby & Centrum Microcredit to provide unsecured business loans to retailers

By Leandra Monteiro

As part of its Shop Owners Benefit Program, PayNearby, India’s branchless banking and digital payments network, has tied up with Centrum Microcredit, the micro finance arm of the Centrum Group, to facilitate unsecured business loans to its retail partners.

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. The solution is aimed at driving the business growth of PayNearby’s retail partners, especially in these challenging times.

The partnership will work towards enhancing the shared goals of the two organizations, which are committed to enabling financial inclusiveness and the economic wellbeing of the retailers. Retailers often need timely and small-ticket working capital loans for short tenures to keep their businesses up and running. Often, due to lack of collaterals 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. This partnership will allow PayNearby to facilitate competitive lending solutions to its retailers who otherwise may not be eligible for formal lending options.

The loans disbursed to the merchants will be on a pre-qualified basis. To enable this, PayNearby has developed a proprietary scorecard based on the transaction data of the retailers along with a set of agreed pre-qualifying criteria of Centrum; and a credit rule engine based on which eligible retailers are shortlisted.

Additionally, this partnership, between Pay Nearby and Centrum Microcredit, has followed a digital-first strategy in its entire product journey. It is currently funding small-ticket, unsecured loans between ₹25,000 to ₹ 1,00,000 with tenure ranging from 6 months to 24 months. The turn-around time is 48 hours even for the new-to-credit and the entire life cycle of the loan starting from origination to disbursement is completely digital.

Announcing the tie-up, Anand Kumar Bajaj, Founder, MD & CEO, PayNearby said, “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 endeavour to making 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.

Our Digital Pradhans are our backbone. They have shown great resilience throughout the pandemic by providing uninterrupted service to ensure citizens have access to essential financial resources. In these dire times, we are committed to fortify them in spirit and with financial backing to ensure their businesses function smoothly as ever.”

Speaking on the partnership, Prashant Thakker, Executive Director & CEO, Centrum Microcredit Limited 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. We are excited to call on PayNearby’s rich data and massive retailer network to fulfill the dream of a financially inclusive India.”