Paytm de­fers launch of pay­ments bank­ing busi­ness

The Pak Banker - - COMPANIES/BOSS -

"Kill the fi­nan­cial ser­vices mar­ket in the coun­try," was Alibaba founder Jack Ma's ad­vice to Vi­jay Shekhar Sharma, founder of e-com­merce firm Paytm, when the for­mer vis­ited the coun­try for Paytm's board meet­ing on 31 Jan­uary.

'"The mar­ket is huge. You should chase the busi­ness that has tons of profit, if you see the top 50 com­pa­nies in the world, they will be dom­i­nated by bank­ing and fi­nan­cial ser­vices in­dus­try. So that's where you should fo­cus,"' Ma said, ac­cord­ing to Sharma. China's e-com­merce gi­ant Alibaba Group and its af­fil­i­ate Ant Fi­nan­cial have in­vested over $500 mil­lion in Paytm and hold around 40% stake in the com­pany. How­ever, the com­pany's foray into the pay­ments bank­ing busi­ness has been de­layed, with the com­pany now look­ing at a launch time­line of se­cond half of cal­en­dar year. Paytm was ear­lier look­ing at launch the busi­ness around April, ac­cord­ing to var­i­ous me­dia re­ports.

"The launch will hap­pen only af­ter June and not be­fore that," said Sharma, on the side­lines of the Nasscom In­dia Lead­er­ship Fo­rum in Mum­bai, adding that the new dead­line that the firm is look­ing at is based on the sev­eral lessons that it has learnt work­ing on the ground. Sharma said that the com­pany un­der­es­ti­mated a lot of things that needed to be done. "By March first week we will an­nounce the top lead­er­ship team of the pay­ments bank ver­ti­cal," said Sharma. In Au­gust, the Re­serve Bank of In­dia (RBI) gave in-prin­ci­ple ap­proval to 11 en­ti­ties to open pay­ments banks that will widen the reach of bank­ing ser­vices and push the govern­ment's goal of fi­nan­cial in­clu­sion.

Apart from Paytm, the oth­ers who got li­cences in­clude Aditya Birla Nuvo Ltd; Air­tel M Com­merce Ser­vices Ltd, a part of In­dia's largest phone com­pany Bharti Air­tel Ltd; Cho­la­man­dalam Dis­tri­bu­tion Ser­vices Ltd; Depart­ment of Posts; FINO PayTech Ltd; Na­tional Se­cu­ri­ties De­pos­i­tory Ltd (NSDL); Re­liance In­dus­tries Ltd (RIL); Tech Mahin­dra Ltd; and Voda­fone m-pesa Ltd, a unit of telco Voda­fone In­dia Ltd and Dilip Sanghvi, founder of Sun Phar­ma­ceu­ti­cals Ltd.

Ac­cord­ing to Sharma, Paytm will have an edge over the oth­ers as it's al­ready well es­tab­lished pres­ence in the pay­ments busi­ness. "We be­lieve that we have an edge, hav­ing built dom­i­nance in pay­ments. We think that we can lead there and con­tinue to get most of the pay­ment busi­ness," he said. How­ever, the mar­ket­place op­er­ated by the firm will con­tinue to re­main an im­por­tant part of the firm's strat­egy, de­spite its push for a big­ger pie of the fi­nan­cial ser­vices in­dus­try, said Sharma.

"The mar­ket­place is one of the most im­por­tant use cases for us and we have been talk­ing about how off­line to on­line is a very crit­i­cal com­po­nent for us. It al­lows us to get the ac­cess to the mer­chant base which is a crit­i­cal user of our BFSI ser­vices. It gives us in­sights to con­sumer and mer­chant be­hav­iour based on which we are able to cre­ate and cater prod­ucts, he said. Paytm plans to roll out its pay­ments bank op­er­a­tions from the city of Meerut in the state of Ut­tar Pradesh and sur­round­ing ar­eas, af­ter which the firm will look at ex­pand­ing to­wards north-east In­dia and cen­tral In­dia.

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