 "Tier II, smaller cities consuming over 80% credit: Google Pay exec")
Over 80 per cent of the loans disbursed by Google Pay went to customers living in Tier II and smaller cities due to their limited access to financial institutions, a senior company executive said.
At present, the company’s partnerships with lenders covers about 13,500 pin codes where it is able to disburse unsecured and secured credit.
“If we think qualitatively about it, a user in these regions has fewer bank branches, non-banking financial companies (NBFCs) to go to. For them, digital access becomes more valuable than those living in tier one cities like Delhi or Bengaluru,” said Sharath Bulusu, Director, Product Management, Google Pay, in an interaction with Business Standard.
At the 10th edition of Google for India, the fintech major announced credit partnerships with two lenders. Aditya Birla Finance Limited for unsecured loans and Muthoot Finance for gold-backed secured credit.
The partnership with Muthoot would enable Google Pay to extend collateral-based credit for the first time on the platform.
“It enables users who do not have a history to get access to loans in a safe and formal manner. For users, who do have some credit history, they end up getting better terms if they prefer a collateralised loan. This is because the risk for the lender is lower,” he added.
As part of the partnership with Muthoot, Google Pay would originate loans and enable the application flow, whereas the lender would be responsible for underwriting and collection.
Among fintechs, there is an increasing interest to extend secured loans to their customers after the Reserve Bank of India (RBI) hiked risk weights on unsecured credit last year.
“Even independent of it, there is a place for secured and unsecured loans in the market. For a set of customers having the same criteria and requirement for credit, if somebody is willing to submit a collateral, a lender will provide a lower rate (of interest) as they have something to fall back on more than a credit history,” Bulusu added.
Google Pay’s credit partnership portfolio now includes five lenders in total. They are DMI Finance, Indifi Technologies, ICICI Bank, Aditya Birla Finance, and Muthoot Finance.
The company will also extend a text and audio-based support agent for credit products based on Google’s flagship Gemini AI (artificial intelligence) models. It plans to roll out more regional languages to the agent beyond English.
“Google Pay’s AI-powered support guide can now answer users’ questions about repayment cycles, eligibility criteria, EMIs and much more, while providing a link to the relevant, detailed terms and conditions,” the company said in a blog post on Thursday.