Airtel Payments Bank Registers 10% Losses In FY17-18

Airtel Payments Bank seems to have had a very shaky, however a cost controlled FY17-18 for a period ending March 2018. While the entire financial year went by in addressing government notices, fines and customer issues and Q4 spent without onboarding any new customers, the company has managed to keep the Y-o-Y increase in its losses at 10%, over the same period last year.

Also, despite of such low end to FY 2017-18, the company has recorded a y-o-y increase of 69% in its revenues, as compared to FY 2016-17.

According to the financial data accessed by business intelligence platform, Tofler, the company recorded an income of $21.66 Mn (INR 160.26 Cr) in FY17-18  as compared to $12.83 Mn (INR 95 Cr) earned in the previous financial year.

Here are few other key statistics of the company:

• The company has controlled advertising and publicity expenses
• The company posted an expense of $58.5 Mn (INR 432.89 Cr) in FY17-18, in comparison to $45.28 Mn (INR 339.33 Cr) recorded in the previous year
• With this, the company posted a net loss of $36.83 Mn (INR 272.62 Cr) in FY17-18, a 10% increase from $32.99 Mn (INR 244.34 Cr) in FY16-17
• The company posted a total loss of $10.45 Mn (INR 774.426 Cr) in FY17-18

The 12 Months Of Roller Coaster Ride

Airtel Payments Bank had to face a lot of trouble in the last one year.

Reports surfaced that, after receiving multiple complaints from customers for Aadhaar-based SIM verification and transfer of LPG subsidies, in an order issued on December 15, 2017, the UIDAI temporarily banned Airtel and Airtel Payments Bank from conducting eKYC of customers using Aadhaar.

However, to the company’s relief, after making a payment of $21.2 Mn (INR 138 Cr) in Direct Benefit Transfer subsidy, Airtel Payments Bank was given a conditional approval to perform Aadhaar-based e-KYC verification of its telecom users till January 10.

Later, in July 2018, nearly 10 months after the trouble started brewing for Airtel and Airtel Payments Bank, the RBI (Reserve Bank of India) and the UIDAI (Unique Identification Authority of India) had permitted the payments bank to onboard new customers and use Aadhaar e-KYC for the same.

Airtel Payments Bank Is Not The Only One

Soon after the Airtel vs UIDAI and RBI battle, its biggest challenger Paytm Payments Bank was directed to stop onboarding of new customers with immediate effect.

Further, the RBI instructed Paytm to have better security mechanisms to store customer data and asked Paytm Payments Bank to have an office separate from that of One97 Communications Ltd.

Here’s look at other players in the segment:

• In April, Reliance Jio commenced the operations of its Jio Payments Bank
• Department of Posts opened its payments bank in January 2017
• FINO kicked-off its operations in June 2017
• Aditya Birla Idea commenced its operations from February 22, 2018

For The Uninitiated: An Overview Of Payments Banks

In late 2013 when Nachiket Mor headed a committee on Comprehensive Financial Services for Small Businesses and Low-Income Households under RBI, they recommended the formation of a new category of bank called payments bank.

Later in July 2014, the RBI released the draft guidelines for payment banks, seeking comments for interested entities and the general public. On November 27, RBI released the final guidelines for payment banks.

A payments bank can accept deposits of up to INR 1 lakh, offer remittance services, mobile payments or transfers or purchases and other banking services like ATM/debit cards, net banking and third party fund transfers but cannot advance loans or issue credit cards.

Based in Delhi and managed by CEO Anubrata Biswas, Airtel Payments Bank began its operations in November 2016 when the Reserve Bank of India granted payments bank license to Airtel on April 11, 2016.

Since its inception, the company has created a network of more than 250K banking points across 29 States. Also, to further enhance the digital payments ecosystem, in January the bank committed to investing $440 Mn to develop a pan-India banking network and digital payments ecosystem.

Besides Airtel, Vodafone, Reliance Industries, Idea Cellular, Paytm, FINO Paytech, India Post and National Securities Depository Limited had all received Payments Banks licenses in the direction of greater financial inclusion.