Largest private sector lender ICICI Bank will offer short-term instant credit to its existing customers who want to make purchases worth up to Rs 20,000 through digital payments leader Paytm.
The bank said the credit is interest-free for the first 45 days, after which if the money is not repaid, the customer will have to pay Rs 50 towards delayed payment fee and 3 per cent interest.
Though the offer is capped at Rs 20,000 per transaction, a customer can avail of the credit facility after clearing the outstanding.
“There is no cap on velocity but only on the outstanding amount under the Paytm-ICICI Bank post-paid card,” Anup Bagchi, executive director at ICICI Bank told reporters on a concall on Thursday.
Asked about the commercial arrangement with Paytm, he said there is no commercials involved with the partner and in case of a default the bank will take the hit and not Paytm.
Depending on the success, the bank will also extend it to non-ICICI Bank customers and other large merchants. The bank has an unsecured book of over Rs 25,000 crore, he said. But said they haven’t set any volume target from the new offer.
“Though it works like a private credit card, credit scoring takes place instantly in this offer and can be availed of round the clock,” Bagchi said, adding this is “real-time credit assessment on the fly.”
Paytm-ICICI Bank postpaid is a digital credit account with instant activation as it comes with no documentation or branch visit while activation is fully online and is based on a new big data based algorithm developed by the bank.