Aditya Puri says e-wallet players have no future. But, are they listening?

 BT Online   New Delhi     Last Updated: February 18, 2017  | 11:20 IST
Paytm has doubtful business model, no future: HDFC Bank's Aditya Puri
Aditya Puri, Managing Director of HDFC Bank

Aditya Puri, the managing director of India's second largest private-sector lender HDFC Bank said that he sees no future in digital wallets.

In an interview to ET Now, Puri said that the current loss of Paytm was at Rs 1,600 crore and its economic model was doubtful.

"Paytm could not be another Alibaba because its model could not be replicated," he added.

"People have grabbed whatever is easily available to pay for coffee, bills, movie tickets, cab rides and just about anything, and Paytm has scored over others," he said.

Ever since Prime Minister Narendra Modi announced demonetisation of high value currency notes, the popularity of digital wallets has grown manifold.

In January, Paytm received final approval of the Reserve Bank to formally launch its payments bank.

Payments banks can accept deposits from individuals and small businesses up to Rs 1 lakh per account.

Last year, Alibaba Group and its affiliate Ant Financial pumped in $680 million into Paytm's parent One97 Communications last year, taking its total shareholding to over 40 per cent in the country's largest mobile wallet operator, Paytm.

Puri also backed the idea of setting up a national bad bank, saying anything that can help resolve the perennial bad loans problem is welcome.

"I don't think a national bad bank is a bad idea. The Government and the regulators are coming up with various discussions as to how solve the issue relating to NPAs and that is necessary so that the banking system has the ability to do more.

"Bad bank is one of the ideas being discussed, there are other ideas like the Bankruptcy Code which should also help, we bankers are also working (on tacking NPA issue)," Puri told a panel discussion at the concluding day of the three-day annual Nasscom leadership forum here.

It can be noted that almost 20 per cent of the banking assets are stressed with the NPAs alone topping 13.5 per cent as of the September quarter. While more than 70 per cent of the system are with the state-run banks, over 90 per cent of the stressed assets with them, leaving them starved of growth capital.

While its banks are starved of cash, the Government finances are not adequate to recapitalise them which was visible from the paltry Rs 10,000 crore for capital infusion into 24 state-run banks in the Budget 2018.

In fiscal 2017 and the previous year, the Government infused Rs 25,000 crore each in to these banks, while their demand is at least Rs 91,000 crore between the next two fiscal years, as per an India Ratings estimate in the core tier I capital alone to meet the stringent Basel 3 capital norms.

For the system as a whole between fiscal 2015 and 2019, the banks need more than Rs 3.9 trillion for the banks to meet the Basel III capital norms. Of this Rs 1.8 trillion are only tier I core capital for the public sector banks.

While the idea of a national bad bank has been doing the rounds ever since the NPA issued ballooned out, one the most concrete banking for the idea came in the recent Economic Survey, which made a strong case for such an entity to address the festering twin balance sheet problem.

(with inputs from PTI)

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