July 4: E-commerce giant Flipkart will soon be foraying into the country’s financial service space by offering credit and insurance products to both consumers and sellers. The products will be offered by Flipkart on its platform under non-banking financial company licence.
The company is reported to have already applied for NBFC licence from the authorities. Once approved, Flipkart will cater its credit and insurance services to over 100,000 sellers and 100 million customers on its platform.
The initial phase will have Flipkart offering lending and micro-insurance services on its platform. The company is also planning to gradually expand the services on other platforms. Insurance companies will be partnered to offer micro-insurance products to customers and sellers, while lending will be provided mostly from its own balance sheet.
Flipkart VP and head of financial services Ravi Garikipat has been quoted by reports as saying that Flipkart’s credit services will leverage its customer understanding to better assess credit-risk profiles. Flipkart believes that its strong relation with the customers will have a key role in underwriting.
Over 60 percent of the customers on Flipkart don’t have access to formal credit, which has pushed them back from carrying out big purchases on the platform. The company has partnered with banks and NBFCs to offer EMIs on purchases, but this has only had little impact. With the services being offered directly, Flipkart believes that more customers would be having access to credit facility, which in turn would also help in the growth of the e-retailer.
As with micro-insurance, Flipkart has already obtained the green signal from IRDA to partner with insurance firms. The micro-insurance offered will cover for specific purchases made through the platform, while sellers will have their product insured against damages in the reverse shipping process.
According to plan, Flipkart is expecting to launch its first set of financial products within a span of three months from now.