‘Pay­ments Bank In­vest­ment is Small, But Op­por­tu­nity Huge’

Bharti has 25 crore ac­tive cus­tomers, mean­ing peo­ple who use a mo­bile. If cus­tomers do even a sin­gle trans­ac­tion a week, we are talk­ing about 100 crore trans­ac­tions a month

The Economic Times - - Money & Banking -

prof­its or not is the trial and er­ror part. But there is op­por­tu­nity, cus­tomers are there.

Will vol­ume trans­late into prof­its? If you look at a sim­ple met­ric, Bharti has 25 crore ac­tive cus­tomers, mean­ing peo­ple who use a mo­bile. If cus­tomers do even a sin­gle trans­ac­tion a week, then we are talk­ing about 100 crore trans­ac­tions a month. Whether that makes money for the bank is sec­ondary, but trans­ac­tions are for real. And out of this 100 crore, 50% are by un­banked peo­ple. So, can I make it bank­able? Of course, I can. Is there an op­por­tu­nity? Of course, there is. Will I make money? Who knows? But, at least, I need to ex­plore it.

If you think that profit in this ven­ture is not cer­tain, then why in­vest? Be­cause the in­vest­ment is in­signif­i­cant and the op­por­tu­nity is huge. (RBI gov­er­nor) Dr (Raghu­ram) Ra­jan moves the in­ter­est rate by 25 ba­sis points, the amount of profit you make is all the amount of in­vest­ment that you do in this ven­ture. It’s not that you are bet­ting the store, it’s a small part of the to­tal share.

With so many pay­ment fin­tech start-ups pop­ping up, what is the fu­ture? It’s early to say. There is a lot of equity chas­ing the space. So, when there is equity chas­ing the space, peo­ple will pour money into this. Con­sol­i­da­tion may hap­pen but to­day peo­ple are burn­ing money. As a bank, I can­not af­ford to burn money. I can’t af­ford to lose ₹ 1,000 crore ev­ery year. A Paytm will man­age to do that be­cause that’s its only busi­ness. As I said, it’s 1/20th of our to­tal busi­ness, or for any bank for that mat­ter. But, for a pay­ment bank, it will be a pre­dom­i­nant part of its busi­ness. There will be some amount of me­an­der­ing that will hap­pen.

Tel­cos have big dis­tri­bu­tion net­works. Will they have an up­per hand? Yes, there will be a rel­a­tive up­per hand be­cause they have a cus­tomer base. Like I said, Bharti has 25 crore cus­tomers, Voda­fone has 18-19 crore cus­tomers, it’s eas­ier to con­vert a part of those into cus­tomers of the pay­ment bank. So, that is the ad­van­tage that tel­cos have.

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