Double Cheer for Slowing Economy Nifty Closes Above 10,000; RIL Leads Stocks Rally
Industrial growth hits 9-month high in Aug; consumer inflation stays steady in Sept
New Delhi: The government had twin cause for cheer with industrial growth picking up pace to a nine-month high in August and consumer inflation remai- ning steady in September, exceeding expectations and raising hope the economy is set for a revival after slumping to a three-year low in the June quarter.
The index of industrial production (IIP) rose 4.3% in August, reversing a contraction in June and faster than a 0.9% rise in July, according to data released by Central Statistics Office on Thursday. Inflation based on the consumer price index (CPI) was at 3.28% in September, unchanged from August, the statistics office said. Benchmark indices ended up 1.1% on Thursday with the Nifty closing a little over the 10,000-mark, led by Reliance Industries surging nearly 4% to a record high ahead of its second quarter results. Sensex ended up 348.23 points at 32182.22.
Industry players contend the process of completing a full KYC can be even more onerous for captive wallet players such as Ola Money, PhonePe and Amazon Pay, where the scope of use by a customer is limited, reducing the incentive to park money in such wallets. “One of our concerns is that even lowusage wallets are required to do a KYC beyond 12 months. This adds friction to customers,” said Sriram Jagannathan, vicepresident (payments), Amazon India. “We urge the regulator to re-examine this in line with international guidelines, and adopt a framework of proportional KYC,” he said.
Experts are of the view that the central bank’s move will lead to a reordering of the business landscape in a market where both large, well-funded companies like Alibababacked Paytm and small niche players jostle for space.
“The wallets space is a three-to-four large players market and may open up scope for 1012 niche players … more consolidation is expected in this sector,” said Vivek Belgavi, partner, fintech leader at PwC.
While the dominant players are adequately capitalised and can meet regulatory requirements, industry watchers fear the new norms will sound the death knell for small PPI (prepaid payment instrument) licence holders, typically those which offer services such as domestic remittance or niche payments. An example would be Alibaba and SoftBank-backed Paytm, which has said it will in- vest $500 million by 2020 to ensure its targeted 500 million customers are KYC-compliant.
“With inter-operability, there is a need for wallet companies to have enough money to be able to handle a large amount of incoming payments from other wallets,” said Vijay Shekhar Sharma, founder of Paytm. “Also, it will require only serious players to enter this space with a strong business model.”
With wallets becoming full-KYC products and limits on balance being enhanced to .₹ 1 lakh, industry insiders questioned the need for a separate payments bank licence, which works on a similar principle.
“We will become fully inter-operable, have higher net worth, eventually will have fullKYC users and will have balance limits same as payments banks — all this kills the separate payments bank proposition,” said MobiKwik’s Singh.
Some players also see the change in regulations as an opportunity to catch up with market leaders like Paytm. Flipkart-owned PhonePe, for instance, feels that since it started off as a UPI-based app, its ticket sizes are higher than that of wallets, which makes customers more pliable to do KYC. PhonePe CEO Sameer Nigam feels the existing infrastructure of Flipkart’s online retail business can be leveraged. “If it is paper KYC, since we have a sister company like eKart (Flipkart’s logistics arm), our ability to get it done will be much better. Flipkart is already going to 10 million households anyway,” said Nigam. (With additional reporting by