Amazon.com, Inc. (NASDAQ:AMZN) has decided to inject new funds of $300 million to improve their operations in India. Along with enhancing their products and logistics portfolio, Amazon India will disburse loans to several small or medium-sized enterprises (SMEs) as well as entrepreneurs to assist them to expand their enterprises. The organization has allied with Capital First Limited, a non-banking financial company for this purpose.
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In August 2015, Amazon had begun providing SME loans from their Amazon Lending platform. Loans were given for a period of 6 to 12 months. Amazon has a robust monetization process from the generated interest. Amazon well levy a 13% to 15% interest rate on the loans.
This new injection of funds is viewed as part of Amazon’s resolve of putting $2 billion in its Indian operations.
The fact that 41% of SMEs in India do not obtain approval for any kind of loan from lending institutions is great for Amazon as it raises demand for their loan service.
General manager of Amazon’s India arm Gopal Pillai, opined that obtaining working capital is the main challenge for sellers. With this step, they are reducing the hassles for sellers to obtain loans and assist them to concentrate on expanding their business on Amazon’s platform.
As per new reports, Amazon’s India arm has already begun roping in qualified merchants to come aboard for this program.
In India, Amazon has roughly 65,000 active sellers. Loans for them culd be approved within a period of five days. Incidentally, India is the third nation where Amazon has launched such a SME loan scheme. The only countries where this is offered are presently Japan and the USA.
Previously, Amazon had partnered with BankBazaar.com to join the financial Indian services market. The facility to provide startup loans is perceived as part of this effort. In all, this can be seen as a big move towards stimulating entrepreneurship in India.