Amazon ties up with Bank of Baroda to attract more sellers

Online marketplace giant Amazon India is racing against time to bring in more sellers so that they sell more on its platform during the festive season. On Friday, it tied up with the Bank of Baroda to offer micro loans to its sellers.

The firm’s arm, Amazon Seller Services Pvt Ltd (ASSPL), is bringing in more financial partners so that it can cater to its 225,000 seller base. The company had last year announced the launch of a seller lending programme in India for small and medium businesses to get fast and easy access to working capital.

The company had partnered with Capital First Limited, an independent Mumbai-based non-banking financial company (NBFC), for the programme. Capital First provides secured and unsecured loans to sellers from Rs 5 lakh to Rs 2 crore at competitive interest rates.

According to the company, Bank of Baroda loans would be offered on invite-only basis to sellers, based on their performance. The programme was piloted by Amazon in July this year in association with the bank. The loans would be extended in the range of Rs 1-25 lakh at annual interest rates between 10.45 per cent and 11.5 per cent.

In India, unsecured loans of Rs 1-25 lakh have very low approval rates. Small-scale businesses get loans at high annual interest rates of 18-30 per cent, with a processing time of up to 30 days. In addition, small businesses have to go through heavy documentation and due diligence to get loan approvals, executives from the bank said.

“Through our engagement with sellers, we realised that lack of financial resources can hinder the growth of small businesses as they scale up, which can impact expansion, especially ahead of the festive sales,” Amazon India director and general manager (seller services) Gopal Pillai said.