‘HDFC Bank talking with Paytm, waiting & watching as events unfold’

HDFC Bank is “talking” to its longstanding partner Paytm as the fintech tries to find a way out of the current restrictions placed by RBI, a senior executive at the largest private sector lender said on Tuesday.

Stressing that the bank would have been conversing with the fintech even otherwise given its partnership in the acceptance and aggregator space, HDFC Bank’s country head for payments Parag Rao said it is in a “wait and watch” mode. Rao was replying to a question on reports about Paytm reaching out to large banks for support.

“Paytm has been a partner over the years for our acceptance business, for our aggregator business. Under the current circumstances, we don’t know too much about what is happening but we are talking, we are waiting and watching to see how events develop. That is all I can say right now,” Rao said.

At an event to launch a new credit card proposition for small businesses here, he also said that ever since RBI placed severe restrictions on Paytm, there has been a “significant increase” in the traction witnessed by HDFC Bank for its payments app and also merchant business.

Every “upheaval” in the market which impacts a rival opens up opportunities for other participants as the smart customers realign themselves, Rao said, adding that there is traction for Fastag, prepaid card offerings and sound boxes as well.

Rao made it clear that HDFC Bank’s partnership with Paytm is with the parent entity One97 Communications, and not with the Paytm Payments Bank, which is under regulatory scrutiny.

The restrictions placed on Paytm take effect from February 29, and HDFC Bank will watch as the events unfold over the next two weeks, Rao said.

Meanwhile, Rao also said the bank will be launching a completely revamped mobile phone app in up to two months from now. The new platform will be far better placed in offering all the contemporary services and directing the users to the right services, he added.

The bank launched four variants of credit cards for small businesses on Tuesday, with joining fees going up to Rs 10,000 for the most exclusive of the cards.

Rao said it first launched a dedicated credit card for small and medium businesses over two years ago, where it has over 3.5 million cards already, and added that learnings from the same have been taken on board for the new set of offerings.

It is also contemplating to launch a dedicated credit card for gig economy workers and freelancers. The benefits in the card will include services such as working at co-working spaces and accounting packages, Rao said.