You are here: Home » Finance » News » Banks
Bank NPAs loans may drop to 5% by March 2023 on economic rebound: Crisil
25% micro credit customers graduated to SMEs since Covid: Bandhan Bank MD
Business Standard

Govt norms ensure no one makes money in payments space: Axis Bank head

"What the govt is doing is that they're taking out the entire P&L (profit and loss) opportunity for us. So if you look at the payments space, no one can make any money in the country at all", he said

Amitabh Chaudhry | Axis Bank | Digital Payments

Press Trust of India  |  Mumbai 

Amitabh Chaudhry
Amitabh Chaudhry, managing director and chief executive officer, Axis Bank

Private sector lender on Wednesday said government mandates on the payments space ensure that no one can make money in the segment.

The bank's chief executive and managing director feared that smaller entities will not be able to survive amid such diktats.

The comments from Axis Bank, which also runs the payments company Freecharge, come amid a debate on whether merchant discount rate (MDR) should be levied on the very popular UPI platform. The government, which wants to popularise digital payments, has been insisting that no charges should be levied.

"What the government is doing is that they're taking out the entire P&L (profit and loss) opportunity for us. So if you look at the payments space, no one can make any money in the country at all. You have to use payments as a platform to make money somewhere else," Chaudhry said at the Global Fintech Fest here.

The worry is that more and more of such demands will emerge, which will take away revenue and profitability pools and then only the big entities can survive and small players will struggle, he added.

The challenges emanating from regulatory and governmental mandates are not limited to payments alone, he said, pointing to difficulties with priority sector lending (PSL) requirements.

"The regulators do ask to do a lot of the things which don't make money for us, even though they fully understand that they need to allow us to do something where we make money to fund lot of areas where we don't make money," he said.

For instance, Chaudhry said, commercial have a 40 per cent PSL requirement, which has 15 sub-sections. A lot of those areas do not make money at all.

spends Rs 900 crore just buying PSL certificates every year to meet the PSL lending norms, he said.

Given such a regulatory environment, he said, the way forward lies in partnerships with big tech companies. He said his bank has already sewed up such partnerships with Flipkart and Google and will have one more stitched up shortly.

The next few years will see many such partnerships across products, which makes it a win-win for all parties involved, he added.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Wed, September 21 2022. 19:05 IST