Google makes big consumer and merchant lending push in India

Google has partnered with banks and other lenders in India to offer loans to individuals and merchants on the Google Pay app as the tech giant broadens its Indian payments app, processing about 4 billion transactions monthly, and makes its strongest push for financial inclusion in the South Asian market.

The company has partnered with Axis Bank, allowing the lender to extend loans to individuals on Google Pay and tied-up with ICICI Bank for credit lines atop of UPI to merchants, Ambarish Kenghe, VP of Google Pay, told TechCrunch in an interview. The credit on these loans to individuals is limited to about $9,600 and the lending partner explicitly spells out the terms of the loans — interest rate and duration — at the time of onboarding.

Even as nearly a billion people in India have bank accounts, they aren’t parking significant money in those accounts for credit bureaus to build meaningful profiles on them. As a result, India‚Äôs credit bureau data book remains thin, which continues to make it difficult for banks and other financial institutions to build confidence to extend credit to the vast majority of the population in the world’s most populous nation.

Approximately 50% of personal loans issued through Google Pay to date in India have been under $360 in size and 80% of all these loans have been credited to Indians living in smaller cities and towns, he said.

Kenghe has a personal story with this challenge. The Google executive told an audience at the company’s annual India event Thursday that his uncle stepped in to pay when he needed financial help to pursue higher education. “Without that, it’s fair to assume I wouldn’t be standing here today,” he said.

“The way we think of payments is geo-shifting money. What would make a huge difference is time-shifting money, which is credit. This creates opportunity, growth and development,” he told TechCrunch.

To be sure, Google is not extending the loan itself, nor is it underwriting the customers. “What we are doing is enabling credit, simplifying the process and working with the industry to ensure responsibility,” he said, adding that Google will ensure that it doesn’t create unnecessary risks for lenders nor does it over-leverage borrowers.

The firm is also enabling lenders to extend sachet loans — starting at about $180 — with simple repayment options to merchants, hoping to serve their small-ticket credit requirements. Google has also partnered with ePayLater to offer credit lines to merchants to meet their working capital needs, the U.S. giant said.

Google has also partnered with HDFC Bank to extend support for the Rupay card network, allowing individuals to make merchant transactions directly through their UPI credit line. Google said it has also partnered with ICICI Bank to extend credit lines to customers.

Google Pay is the No. 2 most popular app for transactions on the UPI network, the payments rail built by a coalition of banks. Google enabling credit to consumers is a win and need of the hour in India, where both individuals and merchants have had to traditionally rely on predatory lenders.