ICICI Bank, Paytm tie up to offer instant credit up to Rs20,000

ICICI Bank, India's largest private sector lender, has tied up with digital payments leader major has to launch 'Paytm-ICICI Bank Postpaid', offering instant short-term credit to existing customers who want to make purchases worth up to Rs20,000 through Paytm.

Millions of Paytm customers can now for the first time get access to instant credit for everyday uses, ranging from movies to bill payments to flights to physical goods, Paytm said.

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 Rs50 towards delayed payment fee and 3 per cent interest.

Though the offer is capped at Rs20,000 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 postpaid card," Anup Bagchi, executive director at ICICI Bank told reporters on a conference call on Thursday.

Paytm-ICICI Bank Postpaid is a digital credit account with instant activation: with no hassles of documentation or branch visit, while activation is fully online. There is no transaction, joining or hidden administration fees.

Available 24x7 and on all days, it is based on a new Big Data based algorithm by ICICI Bank for real-time credit assessment of customers.

The algorithm uses an intelligent combination of financial and digital behaviour of the customer including credit bureau check, purchase patterns, and frequency of purchase to ascertain the credit-worthiness of a customer within seconds. Based on the credit score of the customer, the bank offers up to 45 days interest-free credit limit.

It ranges from Rs3,000 to Rs10,000, extendable up to Rs20,000 based on the repayment history. Paytm-ICICI Bank Postpaid will also offer a quick checkout to customers with the Paytm Passcode.

As a start, Paytm-ICICI Bank Postpaid will offer the credit limit to select customers of the bank using the Paytm app. It will shortly be available to non-ICICI Bank customers using the Paytm app.

Once the credit limit is set up for a customer, a consolidated bill is generated on the first day of the next month, which has to be paid by the 15th day of the same month. Customers can use their Paytm Wallet, debit card or internet banking of any bank for an easy repayment of their dues.

"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''.

"We believe our customers are sincere with their payments and Paytm Postpaid will play a major role in helping them pay for their daily expenses on time. This will democratise access to credit including those with less disposable income," said founder and chief executive of Paytm Vijay Shekhar Sharma.