MUMBAI, India: India's two most prominent e-commerce players are preparing a fresh push into consumer and small-business lending, setting up a new competitive front with traditional banks as demand for digital credit continues to expand.

Amazon is gearing up to offer loans to small businesses through Axio, the Bengaluru-based non-bank lender it acquired earlier this year. Axio, which now focuses on buy now, pay later (BNPL) and personal loans, will resume extending credit to small firms and add cash management services.

"We see tremendous headroom for expanding credit growth in India, particularly among digitally engaged customers and small businesses outside of the top (cities)," Mahendra Nerurkar, vice president for payments for emerging markets at Amazon, told Reuters. He said the company would be "designing tailored lending propositions" to improve cash flow and unlock capital for merchants.

The scope of Amazon's renewed lending plans has not been previously reported.

Flipkart, majority-owned by Walmart with an 80 percent stake, is also moving into consumer credit. Its lending unit, Flipkart Finance, received registration in March and is awaiting the Reserve Bank of India's final approval for its operating plans.

Company filings outline two planned BNPL-style products: zero-cost instalment loans for online purchases over 3 to 24 months, and consumer durable loans with annual interest rates of 18 percent to 26 percent. Comparable loans from traditional lenders typically cost 12 percent to 22 percent.

Flipkart aims to roll out these financial products next year, according to a source with direct knowledge of its plans, who requested anonymity. Flipkart and the RBI did not respond to requests for comment.

India's consumer loan market has surged from about US$80 billion in March 2020 to roughly $212 billion as of March 2025, according to data from credit bureau CRIF High Mark. However, signs of cooling have emerged in recent quarters. Consumer loans include unsecured personal credit, credit cards, and financing for durables.

Both Amazon and Flipkart operate payment apps ranked among the top 10 for transactions on India's Unified Payments Interface (UPI). Their financial push accelerated earlier this year after the RBI allowed foreign-backed tech firms to lend directly through wholly owned units.

"There is immense potential for them to make a dent because they own both the supply-side and demand-side customer data," said Rohan Lakhiyar, partner at Grant Thornton Bharat's financial services risk division. "But execution will be key as they venture beyond core retail."

Amazon has also partnered with about six domestic lenders to offer fixed-deposit savings products starting at 1,000 rupees ($11) via Amazon Pay, Nerurkar said.