Total Pageviews

Tuesday, January 19, 2016

Paytm aims for summer rollout of payment bank

Paytm, the digital wallet and e-commerce company, is looking at a summer launch this year. 'Project Pokhran', as the company calls its payments bank project internally, is in full swing to hire professionals and set up offices for the new business. EY (earlier Ernst & Young) and McKinsey & Co are advising Paytm for the banking foray.
Vijay Shekhar Sharma, founder and chief executive of One97 Communication that runs Paytm, is one of the 11 to get permission from the Reserve Bank of India (RBI) last year to open payments bank. It is learnt that the RBI is fine-tuning its own systems for the new stream of business before the companies can take off.
Paytm, which had wanted to roll out its bank by April 2016, may now launch a few months later than that once the RBI gives its go-ahead, a source said. A few other companies are also believed to be ready for launch but will wait at least till summer. Sharma refused to comment on the timing of the launch. He had earlier said that an investment of Rs 1,200 crore was planned by his group for a three-year period for the bank.
  • ‘Project Pokhran', as Paytm calls its payments bank project, is in full swing to hire professionals and set up offices for the new business
  • EY (earlier Ernst & Young) and McKinsey & Co are advising Paytm for the banking foray
  • Vijay Shekhar Sharma, founder and CEO of One97 Communication that runs Paytm, is one of the 11 to get permission from the central bank last year to open payments bank

Even as Paytm was toying with the idea of setting up its banking headquarters either in Mumbai or Bengaluru, it has now decided to stay put in Noida (NCR), next to New Delhi. Currently, the company has three offices in Noida spread over more than half a million sft. It also has offices across Mumbai, Bengaluru, Chennai and Kolkata.
Paytm may announce the name of the head of the banking business in February and the probable candidate is from the consulting world, Sharma told Business Standard. Before announcing the name, Paytm has to seek RBI permission.
Among the senior executives who've already joined Paytm for the banking business include Kshitij Sanghi, who was earlier employed with McKinsey. Sanghi will look at the technology side as a vice president. A former BCG employee, Narendra Singh, has been hired as deputy general manager for a role in project management. Also, Varun Khullar, who worked for ITC earlier, has joined as vice president to look at partnerships. Vikas Purohit, formerly with Amazon, is also a vice president and is looking at branch and business correspondent network.
Paytm plans to set up around 20 signature branches for the payments bank. In addition, there will be 200 smaller store-like branches and at least 1,000 agents.
In August 2015, RBI allowed 11 business houses and entities to start a payments bank. The others are Reliance Industries, Aditya Birla Group, Bharti Airtel, Vodafone, the department of posts, Cholamandalam Distribution Services, Tech Mahindra, National Securities Depository, Fino PayTech and Dilip Shangvi, chairman of Sun Pharmaceutical.
The entities, which got permission from the RBI, must have an initial capital of Rs 100 crore each and will have to start operations within 18 months, the central bank had said in August 2015.

HDFC Bank grabs 52% share in credit card book size

HDFC Bank, the largest issuer of credit cards in the country, has grabbed more than 50 per cent market share in terms of book size - total net receivables that customers owe to the bank.

"Our credit card book size in November 2015 crossed Rs 20,000 crore mark, representing a 52 per cent market share. The total outstanding in the same month for the industry was around Rs 39,000 crore," said Parag Rao, head (cards, merchant acquiring business & marketing), HDFC Bank.

According to Reserve Bank of India (RBI) data, the lender had 6.72 million outstanding cards in October, the highest in the industry. Its closest competitor, ICICI Bank, had about 3.43 million cards. Even though the central bank does not publish credit card book size data, it mentions the amount of transactions carried on the cards. In October, the amount of transactions carried out on HDFC Bank's credit cards was Rs 6,820 crore. For the entire industry, spending in October was Rs 21,908 crore.

HDFC Bank has now turned more aggressive in its credit cards business. "Till October-November in 2014, we were adding about 75,000-80,000 credit cards a month. In 2015, we have doubled it and source about 180,000 credit cards a month," said Rao.

However, HDFC credit cards customer base continues to be dominated by the bank's own customers. "Even while sourcing, we ensure that 75-80 per cent of the new customers are bank customers and the non-bank customers continue to be a much smaller portion. We haven't changed that mix," Rao added.

HDFC Bank grabs 52% share in credit card book size. Experts say the growth in credit cards is being fuelled by the overall growth in the economy and the government's focus on cashless transactions. The increase in e-commerce transactions has also fuelled the growth of plastic money.

Lenders have also been focusing on analytics-driven marketing and tailor-made offers to attract customers.

Last year, after a gap of five years, the credit card base in the country managed to cross the pre-Lehman crisis level and is now well above the 20-million mark. According to RBI data, the number of outstanding credit cards at the end of October 2015 was 22.88 million.

Apply for credit card: http://bit.ly/2eYFQFQ