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The fintech major, however, did not disclose the investment amount.
CreditMate was founded in 2016 by Jonathan Bill, Ashish Doshi and Aditya Singh. The company focuses on secured lending against two-wheelers.
As a part of the deal, Paytm will also leverage CreditMate's proprietary credit and asset valuation technology and loan management system.
Paytm is also creating a loan management system for its customers.
"We are constantly innovating to provide access to financial services and lending specifically targeted at the large majority of Indians who do not have access to such products," Paytm Senior Vice President and CFO Madhur Deora said in a statement.
Creditmate is addressing the market for loans against two-wheelers through their partner dealer network for customers who might be new to credit, he added.
"Over time, we will use Creditmate's platforms to make credit available both offline and online to our users," he said.
Bill, who is also the CEO of CreditMate, said the investment will allow the company to expand its operations, distribution, lending partnerships and technology.
CreditMate assesses the customer and asset (two-wheeler) using proprietary credit and valuation engines. It works with licenced lending partners for whom it provides a credit recommendation and online access to a complete digital borrower and asset profile to enable fast and secured lending.
It has a dealer network of over 150 across Mumbai and Gujarat.