Mobikwik begins instant credit facility for customers and small merchants

After nine months of announcement to foray into fintech lending space, digital payments startup Mobikwik has finally launched an instant credit facility for customers and small businesses.

The Gurugram-based company has partnered with Bajaj Finserv to avail an instant loan of Rs 5000 via its app. Last year, both entities had entered into a strategic partnership to launch fintech products.

Notably, Mobikwik had also raked in Rs 225 crore from Bajaj Finance in August last year to foray into the fintech segment.

Through its Insta Credit product, Mobikwik looks to tap the market for small credit products. However, the credit size is low, but it can be useful in clearing bills, paying offline merchants for daily transactions like food, grocery, as well as making other payments.

Mobikwik which recently tied up with cab aggregator Ola to provide in-app ride booking facility may draw more users for its credit product. In future, it may pose a challenge to Ola credit feature such as Ola Money Postpaid (earlier Ola Credit) and to be launched Ola co-branded credit card.

According to Upasana Taku, co-founder Mobikwik, the Insta Credit will enable the company to reach out to a new set of customers who did not have access to credit to date. She also claimed that Mobikwik has already pre-approved Rs 3500 crore of loans for millions of customers across the country.

The company had earlier announced to disburse loans to small businesses in the range of Rs 20,000 up to Rs 5 lakh and set a target to digitize credit for an amount of Rs 1 lakh crore in next 12 months.

Besides lending, the Sequoia Capital-backed company has been offering insurance products in partnership with Bajaj Finserv. Founded in 2009, Mobikwik claims over 3 million direct merchants and more than 260 million users on its platform.

The biggest player in digital payments - Paytm has been offering short-term loan up and instant credit facility in partnership with ICICI bank. The SoftBank-backed company planning to float a peer-to-peer lending platform and it also had incorporated Paytm Money to explore opportunities in personal finance and wealth management segments.

Mobikwik late entry into UPI bandwagon raised some questions over the company's future plans and competition with other payments players. Nevertheless, the instant credit facility also took time to go live but it certainly strengthens company's positioning in fintech segment.