Paytm has acquired a stake in a Mumbai-based lending startup CreditMate for an undisclosed amount. CreditMate enables two-wheeler loans to customers with no formal credit history. As a part of this investment Paytm will use CreditMate’s credit and asset valuation technology to create a loan management system for its customers.

The deal will help CreditMate to invest in its technology, and expand its operations, distribution, as well as partnerships.  Started in 2016,  CreditMate is a technology platform of Urja Money Private Limited, which provides services to various banking & financial services companies and Non-banking Financial Companies (NBFC). The technology platform evaluates creditworthiness using customer data collected through loan application and other verification documents of the customer. CreditMate had raised seed funding of $500,000 from India Quotient in October last year.

Paytm’s loan portfolio

Remember, Paytm has a payments bank licence but they are not allowed to give out loans from their own books, but are allowed to partner with other financial institutions to source loans for them.

As such, products on Paytm’s e-commerce arm could be easily be offered on credit to customers. This month, ICICI Bank and Paytm partnered to offer short-term credit to users. The credit given to customers will be interest-free for 45 days and the bank says that it will give loans up to Rs 20,000. Initially, this will be allowed for select ICICI Bank customers who are on Paytm and will be extended to other bank customers as well.