At a time when most payments banks in the country are struggling to expand their reach, Paytm Payments Bank is present in over 550 districts. Satish Kumar, CEO, Paytm Payments Bank hopes the payment bank will have 36 crore savings account by the end of the financial year 2020 from 4.4 crore accounts now. In an interview with Aprajita Sharma of Business Today on the sidelines of the launch of its second branch in Delhi-NCR last week, Kumar talked about competition with banks, discussions with the government and the Reserve Bank of India (RBI) and its expansion plans.
BT: The idea behind launching payment banks was financial inclusion. How is Paytm Payments Bank doing on this front?
Kumar: We have a pan-India presence. We are present in over 550 districts across the country. We may not have physical branches there but around 2 lakh business correspondents (BCs) are present across India to service our customers.
BT: Going ahead, would you focus more on physical presence by opening branches or on digital operations?
Kumar: The ultimate goal is that customers need to be served. Customers require two things: User-friendly service experience and quick grievance redressal mechanism. We don't need branches to meet these requirements. We have more than 1500 customer service agents across the country. We are equipped with multi-lingual capabilities. We resolve around 95 per cent of service calls on the same day. We would not go aggressive on opening branches and will focus more on growing digitally.
BT: What are your key payment products and growth drivers?
Kumar: Paytm wallet is our key growth driver. We have 26 crore wallets and 4.4 crore savings accounts. We introduced Direct Money Transfer and Current Account in the recent past.
BT: What are your revenue streams?
Kumar: We have a mandate to invest a minimum 75 per cent of the customer deposits in the government securities and a maximum 25 per cent in banks, in the form of fixed deposits or cash reserves. We earn interest on government securities and FDs (fixed deposit) with banks. Besides, there is also revenue from transactions on digital payments.
BT: There is fierce competition around as the banks are vying for the same customers. So what steps are being taken to attract customers?
Kumar: We offer zero-balance accounts and offer 4 per cent interest on deposits. We don't charge anything from the customers on making digital payment transactions. Further, the experience of our customers on Paytm app is user-friendly. Although as a payment bank, we can't offer FDs but if a customer wants to have a FD by arrangement with the partner bank, we do that. We offer up to 8 per cent on linked sweep-out FDs. For example, if the balance exceeds Rs 1 lakh, the surplus amount needs to go into the partner bank's account. IndusInd Bank is our partner bank. We charge no penalty on premature withdrawals.
Coming to competition, I believe that pie for the digital transactions in the country is very large and there is space for everybody. There is no need to run after the customers of others. We need to offer relevant products to meet the requirement of our target customers.
BT: What policy changes do you seek from the RBI and the government?
Kumar: Recently, Unique Identification Authority of India (UIADI) mandated that private entities will have to pay for e-KYC (Know Your Customer). We believe it will be difficult for us to bear the cost. We have flagged our concerns with the UIDAI, the government and the RBI; e-KYC is a good thing, but cost should be looked at.
We understand that there is a need for RBI to reconsider the upper limit of Rs 1 lakh on the deposits and allow us to offer FDs within the prescribed limit to our customers. If customers open an account with us, they look for a bouquet of banking services. People belonging to lower strata cannot afford to have multiple bank accounts.
BT: Why have payments banks not picked up?
Kumar: We are doing fine both in acquiring new customers and growth in transactions. There are indeed some challenges but I am sure regulators and the government are aware of our constraints and shall take suitable steps to see that Payment Banks are able to realise the vision which was set up while creating a new breed of banks.
BT: You started offering current accounts since January 2019. How has the response been?
Kumar: We have been getting a lot of applications for opening large salary accounts, accounts for disbursing small benefits over and above salaries such as food vouchers and gift cards etc. So, corporates open current accounts with us and from there money goes to customers.
BT: How much interest income have you earned so far and how have your margins been?
Kumar: We are in the process of consolidating our books for FY19. Interest income and margins will be known once the audit of annual closing is complete.
BT: What are your future targets?
Kumar: We plan to have 36 crore accounts by the end of the financial year 2019-20. We will decide about opening new branches after gaining experience of our Lajpat Nagar, New Delhi Branch. We have a vision of having a pan-India presence and serve our customers through business correspondents.