Google Pay Enters Lending Business In India

Google Pay, the payments application from Alphabet Inc., will begin lending operations in India in partnership with regulated lenders.

Personal loans and credit cards have been driving the pace of retail credit growth over the last few years as banks bet on India's consumption story. As of August, unsecured personal loans extended by banks rose 26% year-on-year to Rs 12.2 lakh crore, while credit card loans rose 30% from last year to Rs 2.18 lakh crore.

Google Pay's tie-up with lenders to offer personal loans will further push accessibility to these loans even as the central bank has flagged concerns.

At the monetary policy announcement on Oct. 6, the RBI Governor highlighted that the regulator was closely watching the unsecured loan space.

"Certain components of personal loans are, however, recording very high growth," he said. "These are being closely monitored by the Reserve Bank for any signs of incipient stress."

While most lenders have reported stable asset quality in the unsecured business so far, the RBI said there was a need for tighter underwriting standards.

"Banks and NBFCs would be well advised to strengthen their internal surveillance mechanisms, address the build-up of risks, if any, and institute suitable safeguards in their own interest," Das said. "The need of the hour is robust risk management and stronger underwriting standards."