Category: Banking & Finance

PayU now exploring small-ticket products for underserved, says Anirban Mukherjee

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Having struck the largest fintech deal in the country with the acquisition of BillDesk, PayU India is now looking to explore small-ticket financial offerings and embedded finance for gig workers.

The company is currently piloting credit offerings for the SMB segment, Anirban Mukherjee, CEO, PayU India, said.

“Our goal is to become one of the leading payment companies by innovating digital credit and payments through partnerships and building together a full ecosystem of various financial services. On the digital credit front, we have already bought PaySense and merged it with LazyPay. We are at present experimenting with SMB credit and revolving credit. The demand is massive, and the segment is underserved,” Mukherjee told BusinessLine.

Strategic invetments

In its attempt to become a full services fintech player, PayU has been regularly making strategic investments in various fintech start-ups operating in different segments including DotPe, Fisdom and Indiagold. Mukherjee added that the company will continue to make similar investments, without disclosing specific capabilities he will be on the lookout for.

He believes that using LazyPay-based systems, consumers with little credit history will pave the way that PayU will take in the future. “We were the pioneers in ‘buy now, pay later’ segment. We are trying to do many things. Technological enhancements enable us to offer simple and lower ticket size products at various price points. We offer merchants overnight lending. We will also be exploring embedded finance for gig workers,” he said.

With embedded finance, unbanked population will get access to payment and lending products through the company’s platforms without needing to have or attach bank accounts.

BillDesk’s acquisition has boosted PayU’s journey in many ways. While PayU has been powering transactions for several internet economy companies, BillDesk has been a clear market leader in payment technologies space enabling over 50 per cent of the billing transactions in the country. The company also has been a key service provider to the BFSI sector and government organisations.

“This deal makes PayU one of the leading companies for digital payments. It gives us massive scale, and it will enable us to process 4 billion transactions together. It also creates scope for much more innovations and at that kind of scale, it will be very significant,” Mukherjee said.

The BillDesk team and founders will continue to be a part of the business even as PayU takes charge.

“India accounts for more than 50 per cent of our business and we are leaders in seven markets out of the 20 we operate in. BillDesk’s products have global applicability and with PayU partnership, we can take those innovations and platforms global,” he added.

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RBI cautions members of public about KYC frauds

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The Reserve Bank of India has cautioned members of public against frauds being perpetrated by fraudsters under the garb of KYC (know your customer) updation.

The central bank, in a statement, said members of public should not share account login details, personal information, copies of KYC documents, card information, PIN, password, OTP, etc. with unidentified persons or agencies.

Further, such details should not be shared through unverified/ unauthorised websites or applications. In case they receive any such requests, customers are requested to get in touch with their bank/ branch.

RBI’s caution comes as it has been receiving complaints/ reports about customers falling prey to frauds being perpetrated in the name of KYC updation.

The usual modus operandi in such cases include receipt of unsolicited communication such as calls, SMSs, emails, by customer urging him/her to share certain personal details, account / login details/ card information, PIN, OTP, etc. or install some unauthorised/ unverified application for KYC updation using a link provided in the communication.

The central bank said such communications are also reported to carry threats of account freeze/ block/closure. Once customer shares information over call/ message/ unauthorised application, fraudsters get access to customer’s account and defraud him/ her, it added.

Periodic KYC updation

The RBI also clarified that while the Regulated Entities (REs) are required to undertake periodic updation of KYC. It said the process of periodic updation of KYC being simplified to a large extent.

Further, REs have been advised that in respect of customer accounts where periodic updation of KYC is due and pending as on date, no restrictions on operations of such account shall be imposed till December 31, 2021, for this reason alone, unless warranted under instructions of any regulator/ enforcement agency/court of law, etc.

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Stocks of Hyderabad-based firms post listing gains, ride on buoyant market

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Riding on a buoyant stock market, shares of several Hyderabad-based companies that made their debut in the market over the past few months through initial public offerings (IPOs) have displayed stellar performance by rewarding investors.

Since October 2020, several companies from Andhra Pradesh and Telangana hit the markets through IPOs and all of them have had strong listings.

Riding the bull market

The ₹6,480-crore IPO of Gland Pharma was one of the largest pharma sector IPOs in recent times. The stock has been in the limelight since its listing on the back of strong financial performance and demand spike in the healthcare sector.

Shares of Gland Pharma rose 128 per cent since its listing in November last year while Likhitha Infra scrip, which got listed in October 2020, has almost doubled since its debut in the market.

Most pharma stocks have seen strong upside since the Covid pandemic broke out last year. The BSE healthcare index has been ruling at a high. Recent healthcare listings of KIMS Hospitals, which raised ₹2,144-crore through its IPO, has gained since its listing in June this year.

On the back of the bullishness in the healthcare sector, several companies have lined-up their public offering. The Hyderabad-based diagnostic chain operator Vijaya Diagnostic Centre is the latest one to hit the market with its ₹1,895 crore IPO.

Two other companies from the region that got listed have also been doing reasonably well on the bourses post listing. MTAR Technologies and Dodla Diary have gained post their respective listings. MTAR’s IPO, a precision engineering solutions company with presence in the nuclear, defence and space and clean energy sectors, was subscribed over 200 times. Dodla Dairy, with presence across five States including Andhra Pradesh, Telangana, Karnataka, Tamil Nadu and Maharashtra, gained 5 per cent since its listing.

Upcoming IPOs

Several other companies are in the process of securing approvals. While Gemini Edibles & Fats India (GEFIL), which promotes ‘Freedom’ brand of edible oil, has filed a DRHP for its ₹2,500 crore IPO, MedPlus Health Services recently filed preliminary papers with capital markets regulator SEBI to raise ₹1,639 crore through an IPO.

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RBI announces opening of third cohort under Regulatory Sandbox

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The Reserve Bank of India on Monday announced the opening of the third cohort under the Regulatory Sandbox.

The application for the third cohort may be submitted from October 1 to November 14, 2021, it said. The theme for the third cohort is MSME lending.

8 entities selected

In separate statements, the RBI also announced that eight entities have been selected for the ‘test phase’ of the second cohort on cross border payments. Six entities have completed the ‘test phase’ of the first cohort on retail payments.

The six entities that have completed the test phase include Nucleus Software Exports (PaySe), Tap Smart Data Information Services (Citycash), Natural Support Consultancy Services (IND-e-Cash), Naffa Innovations (ToneTag), Ubona Technologies (BHIM Voice) and Eroute Technologies.

“The products were evaluated based on mutually agreed test scenarios and expected outcomes. All the products have been found viable within the boundary conditions defined during testing under Regulatory Sandbox,” the RBI said.

The products found acceptable under this cohort may be considered for adoption by regulated entities subject to compliance with applicable regulatory requirements, it further said.

The eight entities that have been selected for the ‘Test Phase’ under the second cohort include Book My Forex, Cashfree Payments, Fairex Solutions, Flyremit, Nearby Technologies, Open Financial Technologies, SoCash India and Wall Street Finance.

“The entities… shall commence testing of their products from the third week of September 2021,” the RBI said.

In all, the RBI had received 27 applications from 26 entities under the second cohort, which was open from December 21, 2020 to February 15, 2021.

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Small merchants now more open to cashless payment methods, reveals Amex India survey

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Indian customers have started thinking about the community at large and are willing to shop from small merchants so as to support revival of small businesses in these pandemic times, a top Amex India official said on Monday.

This has come out in the recent survey commissioned by American Express to examine the impact of the pandemic on the country’s small businesses, and their plans for business continuity for adopting new approaches aligned with changing consumer preferences.

This survey was done soon after Amex rolled out its second edition of the “Shop Small” campaign in the Indian market to incentivise consumer spending at small businesses and help small businesses recover from the impact of pandemic. The campaign was launched on August 3 and will end on October 31.

“Nine out of ten customers surveyed told us they want to do something for small businesses in a scenario where they have seen the pain of second Covid wave and they don’t want any more of that hurt to happen,” Manoj Adlakha, CEO and SVP, American Express Banking Corp India, told BusinessLine.

Notably, 95 per cent customers recognise the impact of the pandemic on local shops and small businesses, which is perhaps why they see themselves prioritising shopping from them, he added.

Sharing the details of the latest edition of “Shop Small” campaign, Adlakha said that this campaign allows Amex Card members to earn ₹500 cashback every time they spend ₹1,000, limited to five transactions while shopping in stores (2020 Shop Small campaign — Card members got ₹300 cashback on spending ₹1,500 or more in one transaction in-person only, upto five times during the campaign period across participating stores).

Improved coverage

Adlakha said that Amex has, in this year’s campaign in India, improved the coverage to 80,000 small and medium-sized merchants (vis-a-vis 40,000 from 2020), spread across six cities (vis-a-vis three cities in 2020) — Delhi NCR, Mumbai, Bengaluru, Chennai, Pune and Hyderabad. Also, this year, the category of merchants have been expanded to include supermarkets, retail shops, healthcare services, bakeries, beauty salons, travel and utilities, electronics, restaurants and hotels.

Adlakha said that merchants are open to new ways of payment acceptance. “This is a new tipping moment where merchants are now saying we are ready to accept non-cash. Earlier, they would go with cash. Now, they are veering towards non-cash,” he added.

The survey was conducted amongst a national sample of over 2,000 consumers and 500 small business decision-makers across top ten cities in Delhi NCR, Mumbai, Bangalore, Kolkata, Hyderabad, Chennai, Jaipur, Chandigarh, Ahmedabad and Pune. This survey was conducted by YouGov between August 16-20 on behalf of American Express India.

It showed that nearly half of the small business-owners surveyed stated they have increased the level of communication to engage with their customers and about a third identify increasing the digital presence of their business as the key for survival. The survey also outlined that 63 per cent of merchants focused on maintaining hygiene and safety for staff and customers and 46 per cent encouraged customers to use non-cash payment transactions.

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Kesoram board approves rights issue terms

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The board of directors of Kesoram Industries, on Monday, approved the terms of the issue of shares by way of a rights issue for an amount aggregating to ₹400 crore.

The company has approved the issuance of up to 8 crore (7,99,99,665) rights equity shares, for an amount aggregating up to ₹400 crore (₹3,99,99,83,250) (assuming full subscription and payment of call monies), it said in a notification to stock exchanges.

Issue details

The shareholders would be entitled to 133 equity shares for every 274 equity shares held. The record date for the same has been fixed for Friday, September 17. The issue will open on September 27 and close on October 11, it said.

The company’s board had, in August this year, approved the offer and issue of partly paid-up equity shares by way of rights issue for an amount aggregating up to ₹400 crore.

Shares of the firm closed at ₹86.20, up 3.30 per cent on the BSE on Monday.

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JP Morgan opens new campus in Hyderabad, BFSI News, ET BFSI

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J.P. Morgan Monday launched of its new campus in Hyderabad, which is spread across 822,000 square feet at Salarpuria Sattva Knowledge City and will consolidate the bank’s global operations, it said in a release Monday.

Employees across technology, risk, operations and support services will work out the new centre.

“The new, integrated campus is a strong testament of our commitment to continue to meet our clients’ needs while ensuring a world-class work environment for our employees, as well as tap the incredible talent pool that the city offers,” said Daniel Wilkening, Chief Administrative Officer, Commercial Banking and Head of Global Services, JPMorgan Chase.

This is one of JPMorgan Chase’s key campuses globally and its largest in Asia Pacific.

The campus has been built to create a healthier and safer workplace. It includes wellness zones, dedicated relaxation and reflection zones, a crèche as well as a fully equipped medical center, the bank said

The centre has an innovation lab, a tech bar, training and conference center facilities, open work cafes on every work floor, and a library.

“Every decision made regarding its design and construction prioritizes the needs of our employees, as well as how the work-place environment will continue to evolve in the future,” said Deepak Mangla, CEO, Corporate Centers, India & Philippines, JPMorgan Chase.

In keeping with J.P. Morgan’s commitment to advance sustainability and maintain carbon neutrality across its operations, the campus has been awarded the Leadership in Energy and Environment Design (LEED – U.S. Green Building Council) fit-out gold standard and sets new benchmarks in sustainability.

Some key features include an energy-efficient building management system to better control and monitor energy use, charging points for electric vehicles and paperless and digitization initiatives.



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Paytm Payments Bank launches India’s first FASTag-based metro parking facility

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Paytm Payments Bank Ltd (PPBL) has enabled the country’s first FASTag-based metro parking facility in partnership with Delhi Metro Rail Corporation (DMRC).

As an acquiring bank for the parking facility at the Kashmere Gate metro station, PPBL will facilitate the processing of all FASTag based transactions for cars having a valid FASTag sticker, thus eliminating the hassle of stopping and paying cash at the counter.

Additionally, Paytm Payments Bank has enabled a UPI-based payment solution for 2-wheelers entering the parking site, thus digitizing the entire parking payments at the site.

With the implementation of the PPBL powered FASTag system, car owners are no longer required to tender cash and parking fee is deducted directly from the wallet or account linked with the FASTag of the respective vehicles. Two-wheeler owners can also pay their parking fees digitally at the metro station via a simple UPI payment.

Also read: Paytm Money launches wealth and investment advisory marketplace on its platform

Mangu Singh, MD, DMRC, said in a statement, “This is another step towards digitalization in the DMRC’s endeavour to provide solutions to our customers especially in these times when contactless transactional methods are the need of the hour.”

PPBL will digitise parking facilities across the country with Kashmere Gate metro station being the first one to be powered by the bank’s digital payment solution.

The bank is closely working with various municipal corporations across several states to initiate FASTag-based parking facilities both at organised and unorganised sites. The bank is also in discussion with various stakeholders to implement digital payment solutions for parking areas at shopping malls, hospitals, and airports.

Also read: How supply chain control towers will transform Indian retailing

Satish Gupta, MD & CEO, Paytm Payments Bank Ltd said, “It has been our endeavour to expand the FASTag network in our country and empower our users with seamless & hassle-free travel. In this quest, we are excited to partner with the Delhi Metro Rail Corporation for enabling digital payment solutions at their parking facility. We will continue to work with other parking providers across the country to adopt a safe and contactless payment solution by implementing the FASTag system.”

Paytm Payments Bank is already India’s largest issuer of FASTags and acquirer of toll plazas for the National Electronic Toll Collection (NETC) program.

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Retail banking a growth story whose potential hasn’t been unearthed fully: IDBI Bank

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IDBI Bank is readying an “API (Application Programming Interface)-Banking” platform that will act as a bridge between third party entities such as account aggregators, payment service providers and fintechs, and its core banking solution platform to create a connected ecosystem, enhance customer experience and open up new revenue streams, according to Suresh Khatanhar, Deputy Managing Director (DMD).

In an interaction with BusinessLine, Khatanhar emphasised that retail banking is a growth story whose potential has not been unearthed fully. Excerpts:

Now that you are out of the prompt corrective action (PCA), will your bank re-balance its advances portfolio?

We came into difficulty because of the high provisioning arising from the Asset Quality Review (AQR) exercise (initiated by the Reserve Bank of India for banks in 2015). This had an impact on our capital. We had a little extra problem because of our Development Finance Institution (DFI) status in the past, whereby we had chunky exposure to infrastructure and core sectors. We addressed this by taking a few measures. Firstly, by de-risking the loan portfolio. Secondly, we revisited our risk management policies. Thirdly, we worked on the risk appetite framework, whereby we adopted a capital light business, so that we are future-ready.

Tumultuous journey of a development bank

Actually, during the PCA period (from early May 2017 till early March 2021), we could deep-dive into our process, products, risk management policies and also re-balance the portfolio. We were skewed in favour of corporate banking, where the risk is concentrated. Though we were not allowed to lend to corporates under PCA, we saw in it an opportunity to grow retail advances. So, our corporate to retail loans ratio is today at 38:62 (57:43 when PCA was imposed).

The portfolio composition shift happened because we were not doing corporate loans. But now that we have started doing corporate loans, this ratio, in all probability, will shift. But then this year, I don’t think retail advances go below 60 per cent (of total advances). We have decided that we will not go below 55 per cent in retail.

IDBI Bank net profit soars 318% to ₹603 crore in Q1 FY22

And then we had a lot of high-cost borrowing. Bulk term deposits were at about 36 per cent of total deposits. This has come down to about 8 per cent. Our CASA (current account, savings account) was about 32 per cent of total deposits. This is now at 52 per cent. So, this has helped us to improve our cost of funds and cost of deposits.

We would like to further consolidate and strengthen our balance sheet, which we have been doing for the last two-three years, and grow. It is now time to grow the loan book from here on.

Stress seems to be building up in banks’ retail portfolio. Isn’t retail lending becoming a bit risky?

Having decided to become a retail bank, we put in place a reorganised structure…And today, we have separate verticals for structured retail assets, micro, small and medium enterprises, agriculture, and recovery as well as collection. We have separate processing centres. We have centralised operations. All these are very progressive steps, ensuring that risk is properly addressed…So, this way our operations have been segregated. And more importantly, this business model is a scalable one because retail is a volume game.

The retail banking story is a growth story. I don’t think the potential has been unearthed fully. It is a growing market. Today, the service sector is growing. People working in the sector want car loan, housing loan, personal loan, place deposits, make investments, and want various services…So, retail banking has the potential to grow.

Now in such a severe pandemic, which comes once in a century, anything under the sun can come under stress.

Our bank’s retail portfolio composition is a little different from other banks. We are not into unsecured loans and 93 per cent of our retail loan book is mortgage book, which is secured. Ninety per cent of the borrowers are salaried employees with credit score of above 700. While stress is there because of the pandemic, given this kind of borrower composition, revival is very much possible and easy. And today, even after the second wave of Covid, our collection efficiency is at pre-Covid level, which is 94-94.5 per cent….So, our retail banking model is well set and we have a committed sales force.

You mentioned being future-ready. Can you throw some light on this?

As soon as economic activity improves further, we would like to do more business, give more services to our customers…But simultaneously, our focus this year will be on digital penetration. We are working on various digital products. So, having made our balance sheet strong and robust, we would also like to make our infrastructure robust.

Now our API-Banking is also getting ready. This will help us integrate lot many apps so that we can onboard many fintechs, going forward.

API-banking will be integrated with our core banking solution platform. This will enable us to connect a lot of applications for cross-selling third party products, paying utility bills and credit card issuance, among others.

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