Two e-commerce giants, Amazon and Flipkart, are gearing up to join the lending business. While Amazon, founded by US billionaire Jeff Bezos, has started gearing up to provide loans to small businesses, Walmart-backed Flipkart is focusing on boosting sales through its “Buy Now, Pay Later” offerings.
The companies reportedly intend to introduce financial products in an effort to take on India's commercial banks. Earlier this year, Amazon acquired Bengaluru-based NBFC Axiome. The company now focuses on personal loans and Buy Now, Pay Later services. Along with lending to small businesses, Axiome will offer cash management solutions.
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Flipkart, 80%-owned by Walmart, incorporated its non-bank lending arm, Flipkart Finance, in March this year. The company is currently awaiting approval from the Reserve Bank of India. Once cleared by the top regulator, Flipkart intends to extend no-cost online monthly instalment loans for 3-24 months, as well as consumer loans bearing annual interest rates between 18% and 26% for buying goods.
In comparison, commercial banks generally extend loans for consumer durables at annual interest rates ranging from 12% to 22%.
