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Payment gateway service provider PayU India announced to start its consumer credit and lending arm PayU Credit after it received a Non-Banking Financial Company licence from the Reserve Bank of India, today. The company is set to boost its effort in the digital lending space with the recent development.

Jitendra Gupta, the managing director of PayU India will head the new arm, according to a statement by the company. The company has been working lately to strengthen its position in the Indian finance and lending market. Accompanied by a series of acquisitions, investments and tie-ups, the latest development will help the firm expand its credit-focused offerings.

“We see the (Indian) consumer credit market as a trillion-dollar market currently… We feel that our platform approach will address this by bringing in different lenders, our balance sheet, partnering and investing in other companies, so that we can address the different segments of credit needs,” Gupta said.

PayU processes monthly payments worth Rs 8,000 crores and growing while it contributes 47% to its parent company’s total payment value. The firm drives 2% of its overall revenue from credit business. PayU has more than 4,00,000 registered merchants on its platform.

Earlier this month, the company partnered with PhonePe, the Flipkart owned UPI payments app to help the former expand to new online merchant base. Last month, the firm participated in a funding round to help digital lending startup ZestMoney raise Rs 94 crores. PayU has also partnered with Reliance Money to offer app-based instant loans. In July this year, the company launched PayUnow, a platform to enable offline businesses to come online.

A few days ago, Bon, a lending startup for gig workers raised $1 Mn in seed funding from Sequoia Capital India. Prior to that another microcredit startup Olly Credit raised an undisclosed amount from China-based incubator cum investor JadeValue.

India has witnessed a growth in the number of fintech startups in the digital lending space. Major players like LendingKart, Faircent, ZestMoney, KrazyBee, KreditBee and Slicepay are already disrupting the space. India is a huge market for fintech institutions. And PayU is looking to target the financially weaker population.

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