US-based tech giant Google has announced the launch of sachet loans, along with four other credit initiatives, on the Google Pay app in India.

The company has partnered with DMI Finance to provide the sachet loan service, it said during the Google for India 2023 event on Thursday (October 19).

Google India said that its experience with merchants has taught the company that they often need smaller loans and simpler repayment options.

To meet this need, sachet loans on Google Pay will provide flexibility and convenience to SMBs, with loans starting at just INR 15,000. These loans can also be repaid in simpler repayment amounts as low as INR 111, the company said.

Google has partnered with other banks and lenders in India to enable credit lines for individuals and merchants on the Google Pay app.

The tech major has partnered with Axis Bank to allow the lender to extend personal loans to individuals on Google Pay.

Besides, it has also tied up with ICICI Bank, allowing merchants to avail credit lines from banks on the UPI and make payments via Google Pay.

Similarly, Google Pay has partnered with ePayLater to enable a credit line for merchants. This product will help solve the working capital requirements of merchants, the company said.

While speaking on the launch of these new credit initiatives by Google, Ambarish Kenghe, VP of Google Pay, said, “Only one in five eligible users in India can get access to formal credit and the delta is even wider for business loan seekers. This leaves people at the mercy of informal levels, exposing users to exorbitant interest rates as high as 300%, and unscrupulous recovery practices.” 

“Responsible credit would offer a great solution to this challenge… Digitising credit can lower operational costs, bring loan sizes down and expand the reach of formal credit,” Kenghe said, stressing that Google is not a credit underwriter but works with the ecosystem to create simpler and responsible ways to provide credit access. 

Meanwhile, the tech giant also announced the launch of DigiKavach — a programme aimed at keeping online financial frauds in India at bay.

The company has also partnered with the Fintech Association for Consumer Empowerment (FACE) to fight predatory digital lending apps on Play Store in the country.

We must note that a lot of digital lenders have mushroomed in India over the last few years. This made the RBI float a regulatory framework for digital lending last year.

Meanwhile, India’s lendigtech ecosystem continues to grow on the back of increasing digitalisation. This segment is expected to become a $1.3 Tn market opportunity by 2023, as per Inc42.