At a time the Indian banking sector is battling an unprecedented bad loans crisis, Paytm, India's largest digital financial services provider, hopes to step in with a solution soon. The buzz is that the company's team in Toronto is actively working on a system that will track users' digital transactions to ascertain their "credibility score". The latter can then help banks judge whether it would be safe to grant a loan to an individual.
"The credibility of an individual can be ascertained from the nature of his digital transactions, which tell you a lot about his behaviour," Paytm CEO Harinder Takhar told The Economic Times. "If a reliable system is evolved, which can predict with sufficient accuracy about the capacity and willingness of an individual to return his/her loan, it would tremendously help the lender," he added.
According to Takhar, "access to capital" is pivotal to growth. As an example, he cited small-level entrepreneurs unable to grow their business due to non-release of loans by banks. The algorithm that Paytm's Toronto office - housing nearly 100 employees from diverse backgrounds - is working on will, hence, be a boon for both credit-worthy customers and banks.
Significantly, he told the daily that the "fraud prevention" team at the Toronto office has nearly 10 data-crunching experts keeping a close eye on digital purchases being made through Paytm. Any suspicious activity by a client is immediately red-flagged to the team in India.
This development comes just 10 months after Paytm acquired a stake in CreditMate, a Mumbai-based fintech startup focussed on enabling its dealer partners to seamlessly assess, approve, process and distribute two wheeler loans to customers with no formal credit history. At the time, the company had said that it hoped to leverage CreditMate's proprietary credit and asset valuation technology to create a loan management system. Paytm certainly appears to be getting there fast.
The company, meanwhile, is making a bigger play for the Canadian market, where reportedly 30% of the citizens still don't make digital payments. The Paytm Canada app, which allows Canadians to pay their bills online, hopes to win this chunk over.
Edited by Sushmita Choudhury