Airtel Payments Bank has no plan to become a small finance bank, MD and CEO Anubrata Biswas said in an interview with Moneycontrol. Unlike payments banks, small finance banks are allowed to extend credit.
The small finance bank model in no way applies to Airtel Payments Bank, Biswas said on August 21. Biswas added that it is deepening its product suite across two sets, including loan process/products and insurance.
The unlisted entity of the Bharti Group said its profit grew by 143 percent on a year-on-year basis and revenue increased to Rs 400 crore for the first quarter of FY24. Customer deposits at Airtel Payments grew to Rs 1,922 crore and it now has 55.4 million monthly transacting users. Edited excerpts:
Do you have any plans to become a small finance bank?
We do not have any plan to become a small finance bank as we don't believe that the small finance bank model in any way is applicable to Airtel Payments Bank. Also, we firmly believe that we will be able to drive more value and impact if we're allowed to, as a payment bank, only micro lend. So our thought processes and actions are guided by that view.
What is your outlook on overall growth for the next financial year?
In Q1 of FY24, we are seeing a very strong rural proposition where we give access to consumers and have created banking points close to them. Also, the urban proposition where we give a safe, secondary digital banking account – this is seeing a very strong uptick.
Therefore, we see a lot of momentum even going ahead. It's our first Rs 400 crore revenue quarter and this is a YoY growth rate of 40 percent.
What kind of projects are in the pipeline to keep up this momentum?
One is in our rural proposition, we are launching a debit card and we are expanding our banking penetration more.
Second, on our digital side, we are actually launching better interfaces and experiences that will culminate in a new digital banking proposition in Q3 of FY24. Third, we are deepening our product suite across these two sets, including process/products of loans and insurance.
What's the status of your IPO plan?
There is no plan for the next 2-3 years. Though I can't place any timeline year to it, it will be based on so many things – market timing, market conditions, etc. One thing I can tell you is that the bank will eventually list – there is no question about that. It will be difficult to predict the timeframe.
Why have payment banks not been able to survive?
One has to be very clear that this model is a low-cost-per-user and a low revenue-per-user model. Right now, lower costs for users will not happen unless you onboard a large number of users and spend that amount of time over the years. So payment banks who didn't want to do that sort of parked the model. Players who were clear about it spent that time and now all of them are profitable.
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