AMAZON INDIA LENDING PLATFORM

Amazon India, one of the ecommerce companies in India, has recently launched a platform whereby multiple lenders may offer loan to sellers registered with Amazon (Sellers) and the Sellers can select any particular lender based on the terms and conditions of the loan and get their loan disbursed. This program is known as Seller Lending Network (Program). Amazon has further clarified that it would only act as a facilitator for the Lenders and the Sellers.

The Program was launched with the object of assisting the Sellers at various stages of their business cycle. As per Amazon India, the primary reason behind the failure of a business or the incapacity to purchase raw material and inventory, etc is the lack of working capital.

Therefore, Amazon India has so far associated with six lenders under the Program, namely, Capital First, Capital Float, Bank of Baroda, Aditya Birla Finance, Yes Bank and FlexiLoans (Lenders).

Herein, Amazon India has planned to select only those profiles of Sellers which match the interest of the Lenders and thereafter, send the selected Sellers an invite, thereby giving details about the Program. Interested Sellers may then opt for the Program and apply for loan at Amazon’s Seller Central, a platform where the Sellers are registered with Amazon.

The Lenders may approve the loan of a Seller based on their performance, sales history and any other criteria. Upon approval of the loan, the amount would be lent directly to the Seller by the Lender. The entire procedure of disbursement of loan may take two to three days.

In order to ensure that Sellers make a timely repayment of loans to the Lenders, Amazon India has reportedly planned to provide for repayment of a percentage of amount earned by the Seller, through Amazon, directly to the Lender.

This Program may also prove to be beneficial to Amazon India as the Sellers who obtain loans under the Program, would utilize the loan amount to purchase raw materials and inventory to manufacture and sell products through Amazon or to develop their products and thereby improve their business.

This Program may prove to be a breakthrough as it takes into consideration the financial issues and obstacles that small and medium businesses face at various stages of business cycle and may help them to reestablish their business in this highly competitive market.

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer