Paytm Payments
Bank has written to the Reserve Bank of India (RBI), seeking an in-principle approval for becoming a small finance bank (SFB) that
will enable it to extend loans. The bank has said that the approval will help
the lender prepare the groundwork so that it would not have to spend time when
it completes the five-year waiting period in a couple of years.
Paytm Payments Bank CEO Satish Kumar Gupta said that his
organisation is the only profitable payments bank and has been in operations since May 2017. “One of the
conditions for granting licence as a payments bank was that we have five years
experience in the payments space. I have written to the RBI, asking for an
in-principle approval so that we will be prepared to apply for the final
licence when we are eligible,” Gupta said.
Last year, the RBI had said
that payments banks could seek a conversion to SFBs. This conversion option was
also made available to cooperative banks. Unlike payments banks, SFBs can grant
loans.
Gupta said that the Paytm Payments Bank licence was cleared
after granting a fit and proper due diligence. “Neither Ant Financial nor SoftBank have any interest or representation in Paytm Payments
Bank,” he said.
Vijay Shekhar
Sharma currently holds 51% in the entity with One97
Communications (OCL) holding 39%, and the remaining 10% held by a joint venture
between Sharma and OCL. In a filing for its initial public offering, Ant
Financial had described OCL as a major associate in which it holds 30.33%
equity interest. Ant Group’s stake in Paytm’s parent has been valued at $5
billion, based on the $16-billion valuation ascribed to the business.
According to Gupta, the e-wallet and UPI business are fully
in Paytm Payments Bank and the Paytm Payments Gateway, which facilitates
customers to do e-commerce transactions at merchant portals, is the only
payments related business outside the bank. Gupta said that the bank has seen a
big jump in business in August as more and more customers preferred the
contactless QR method for doing transactions during the Covid-19 pandemic.
“The RBI had allowed us to
convert the minimum KYC account to a merchant account with the consent of the
user. This was a big relief as these accounts had to be suspended if full KYC
was not done after a year,” said Gupta. The bank’s transaction volumes had
taken a 30% hit immediately after the lockdown, recovered to pre-Covid levels
last month and is expected to be 30% above pre-Covid levels in August.
According to Gupta, the bank processes over Rs 55,000 crore of transactions a
month.
“Our business model is
completely different from other payment banks. We are not interested in deposit
and our revenue is mostly from transactions,” said Gupta. He said that the bank
has not been hit hard by the ban on merchant discount rate (MDR) on RuPay as
most of the transactions were on the bank’s own network and it therefore did
not incur fees.
“We have made a representation to the National Payments Corporation of India to waive their switching fee where there is no MDR as these transactions would become a loss-making proposition for us,” said Gupta.
Sandip Ginodia , CEO
ALTIUS INVESTECH PVT LTD
We deal in over 60 unlisted companies with 15 years of experience
For latest prices visit : www.abhisheksecurities.com/unlisted.htm / call : 09830271248 .
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