Airtel Payments Bank Raises INR 225 Cr For Deeper Presence In India

Bharti Airtel’s financial service arm Airtel Payments Bank has raised INR 225 Cr from its parent companies Bharti Airtel and Bharti Enterprises to solidify its presence in India and expand to Africa.

According to the Ministry of Corporate Affairs (MCA) filings, the company has raised INR 180.22 Cr from Bharti Airtel and INR 44.77 Cr from Bharti Enterprises. As a part of this transaction, Airtel Payments Bank has issued 180,225,000 and 44,775,000 preference shares to Bharti Airtel and Bharti Enterprises, respectively. The nominal price per share stood at INR 10.

The investment for Airtel Payments Bank has come after it recently partnered with Western Union to launch real-time cross-border money movement in India and Africa. The tie-up will help Airtel Payments Bank offer a real-time payments solution to millions of account holders in India. The partnership will also help Airtel to offer real-time payments feature to its customers in 14 African countries. Airtel is expecting to launch this service by 2020 end.

Sunil Mittal, chairman of Bharti Airtel, said that the collaboration will help in providing connectivity and digital empowerment to millions of people across emerging and developing markets.

“The partnership will work to contribute to the development of a sound and inclusive payments ecosystem in emerging markets to spur financial inclusion and economic growth,” Mittal was quoted as saying by ET.

Will Airtel Payments Bank Rise Above Losses?

In FY 2019, Airtel Payments Bank filed losses of INR 338.8 Cr, which was a 24% hike as compared to last year’s loss of INR 272.6 Cr. However, Airtel Payments Bank also witnessed an increase of 59% year-on-year (YoY) in revenue, registering INR 254 Cr from INR 160 Cr last year, which was a major boost for the company.

While Airtel Payments Bank is still trying to make its way through huge losses suffered by payments banks in India, a few of them have already failed and have shut down their operations, which has also been highlighted in the Reserve Bank of India’s (RBI) ‘Trend and Progress of Banking in India’ report.

According to the report, the Indian payments banks have registered a 21% hike in their aggregate losses from INR 512 Cr in the financial year 2018 to INR 626.8 in FY19, ending March 2019.

After suffering operational losses for years, Vodafone’s payments bank Vodafone m-pesa has recently shut down. Last week, the RBI cancelled the certificate of authorisation (CoA) of Vodafone m-pesa on account of voluntary surrender by the company. Prior to this, Aditya Birla Idea Payments Bank, after a year of the launch in February 2018, had shut down the company.

Besides these two companies, four other operators in the payments bank category have shut down their operations in the country. The list includes Tech Mahindra, Cholamandalam Investment and Finance Company, IDFC Bank and Telenor Financial Services, and a consortium backed by Sun Pharma founder Dilip Shanghvi.