It Pays to have a Good Credit History at MobiKwik Now
Short-term lending to help co weave in wealth management and small investments
New Delhi: Digital payment firm MobiKwik, which has not yet got the payment bank licence from the Central bank, has started a pilot for extending short-term credit to a select group of its existing customers based on their transaction history. This is part of the company’s larger strategy to weave in wealth management and small investments along with enabling payments through its wallet. MobiKwik competes with the likes of Paytm in this space which has already got a licence for a bank and plans to launch it by August this year. According to Upasana Taku, cofounder of MobiKwik, the mobile wallet firm has drawn up a list of its power users who are offered a line of credit which can be repaid within 15 days. The company has tied up with Non Banking Finance Company (NBFC) Fullerton for it and charges an interest fee of 5% on the loaned amount. Taku told ET that the company is working on ways to enable shortterm savings for customers and simplifying wealth management for them by reducing the paperwork and doing away with the financial jargon. On cards are fixed deposits and Systematic Investment Plans (SIPs) for mutual funds. MobiKwik is currently in talks with multiple banks to partner for these offerings. “Even without the payment bank licence, we can do everything that a bank will be able to under the norms,” said Taku. The only thing which MobiKwik will not be able to do is use the word “bank” she added.
In August, the RBI gave ‘in principle’ approval to 11 entities to run payment banks, including Relian- ce Industries, Airtel M Commerce Services, Vodafone m-pesa, Tech Mahindra and Idea Cellular’s promoter Aditya Birla Nuvo. Others applicants that won approval include Fino PayTech, Department of Posts, National Securities Depository, Sun Pharmaceuticals MD Dilip Shantilal Shanghvi, and Cholamandalam Distribution Services. The entities, which have 18 months to start operations, are in various stages of implementation.
MobiKwik’s rival Paytm also has similar plans after it rolls out its Bank operations. In an interview in February, Vijay Shekhar Sharma, cofounder of Paytm, told ET the Bank will be focused on driving small savings for its existing urban and semi-urban consumers. The company is looking at using technology to create instruments that will help people earn interest on even .₹ 500 kept in their bank accounts. According to Sharma, the bank will focus on savings and payments initially and then expand to wealth management.