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Axis Bank aims to double customer base with FreeCharge buyout

Axis Bank on Thursday struck a deal to buy 100 percent stake in digital mobile payment platform for Rs 385 crore in an all-cash deal

July 27, 2017 / 09:59 PM IST

Axis Bank, country’s third largest private lender, plans to double its customer base from 2 crore at present with the acquisition of wallet firm FreeCharge from Snapdeal.

Axis Bank on Thursday said that it has struck a deal to buy 100 percent stake in digital mobile payment platform for Rs 385 crore in an all-cash deal.

With this, Axis Bank wins a closely fought battle to acquire FreeCharge, which was bought over by Snapdeal in 2015. Amazon and Times Internet were the other contenders in the race for the buyout.

Calling it a strategic fit, the Axis Bank management said that payments are at the core of the bank’s retail strategy and the FreeCharge acquisition fits in with that.

The acquisition was a strategic fit. The platform is a good quality one and we felt the value we paid was good, Shikha Sharma, CEO, Axis Bank.


Jairam Sridharan, Chief Financial Officer at Axis Bank said, “Acquiring FreeCharge will allow us to top up our services... The acquisition will help the bank double our customer base.

At present, FreeCharge has about 5.4 crore customers (can include Axis Bank customers) while Axis Bank has 2 crore customers (mostly savings account), the bank said. However, the bank did not share the overlap customer figure.

Rajiv Anand, Executive Director (Retail), Axis Bank said, "Payments are core to our franchise. The more payments a customer does, the stickiness is that much higher. Therefore, it is imperative to make transactions simple. The more the customer transacts with us, we can engage more and once we do that, offering personal loans, credit cards, personal finance, etc becomes much easier."

About 58 percent of the bank’s active customers are on digital, while 40 percent of mobile banking customers are exclusively active on their mobile application.

The FreeCharge deal will be subject to regulatory clearances.

At present, Reserve Bank of India (RBI) guidelines do not allow one entity to hold more than one pre-paid instrument licence.

Sharma told reporters that the bank will engage with the regulator to understand whether FreeCharge can remain an independent entity. Based on the RBI’s directions, the bank may look to integrate the operations of FreeCharge with the bank at a later stage if needed, she said.

The bank will also absorb 200 employees of FreeCharge into the bank.

Axis Bank’s acquisition of FreeCharge comes at a time when banks are facing competition from increasing market share from fintech players as the government continues to push customers towards digital payments.

Pre-paid instruments, one such tool of digital payments commonly known as digital wallets, recorded transactions of Rs 2,410 crore in the month of June, as per RBI data.

All electronic payments, which include real-time gross settlement (RTGS), National Electronic Funds Transfer (NEFT) and other means, add up to a much larger Rs 113 lakh crore, the RBI data shows.
Beena Parmar
first published: Jul 27, 2017 06:35 pm
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