Vijay Shekhar Sharma-led One 97 Communications has been the digital revolution in terms of multiple fintech services. One of the financial performances that has come up is from Paytm Payments Bank, which has become One 97 Communications’ first profitable business.
In a media statement, Paytm Payments Bank said it has turned profitable for the fiscal year ending March 31, 2019 recording INR 19 Cr in profits. This is in stark contrast to INR 51.42 Cr loss the company faced in FY18.
Media reports have pegged the company’s income to INR 1500 Cr, a 108% jump from its income of INR 721.96 Cr in the previous year. This growth comes at a time when the Reserve Bank of India is concerned with the net losses of payments banks during 2016-17 and 2017-18.
Losses Of Payments Banks Concern RBI
In a report by the RBI entitled ‘Trend And Progress Of Banking In India 2017-18’, the RBI said, “The losses of payments banks are attributed to high operating expenses as large capital expenditures had to be incurred in setting up initial infrastructure.”
A Payments Bank can accept deposits of up to INR 1 lakh ($1,433), 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.
Paytm Payments Bank: Beyond The Industry Expectations
Paytm Payments Bank officially commenced operations in May 2017 and later in November 2017, it was formally inaugurated by finance minister Arun Jaitley. Till date, it has raised a total funding of $61.78 Mn (INR 400 Cr).
Paytm Payments Bank is a mobile-first bank with zero charges on all online transactions (such as IMPS, NEFT, RTGS) and no minimum balance requirement. For savings accounts, the bank currently offers an interest rate of 4% per annum.
After a ban on operations by RBI, in October 2018, the company appointed veteran banker Satish Kumar Gupta as managing director and CEO for the Payments bank. Here’s a breakdown of the latest performance indicators of the company:
- Over 19% market share of mobile banking as of Mar’19
- Processes over Rs 3 Lakh Crore worth of digital transactions on an annualized basis
- A market share of 32% for UPI transactions
- As of April 2019, INR 500 crore deposits in the savings account
- 45 Mn RuPay Platinum Debit Cards issued to customers
Satish Kumar Gupta, MD and CEO, Paytm Payments Bank said, “We are aiming to introduce more products and features on our platform to increase the monthly processing of savings account payments from INR 24,000 crores to INR 40,000 crores in FY ’20.”
In all, Payments Banks, which were launched with an ambition to role out a path towards a truly digital India are yet to take off. However, Paytm Payments Bank turning profitable can be seen a step in the right direction.