Kolkata: Airtel Payments Bank, the country’s first payment banking entity, will go for selling simpler third party insurance and loan-related products within a year in order to bolster its revenue stream.
The payment JV of Bharti Airtel and Kotak Mahindra Bank is trying to tap 90% of the 14 million ‘cash-only’ small merchants in India for introducing direct cashless payments through its platform.
“According to RBI norms, as a payment bank, we cannot offer fixed deposits (FD). Offering mutual fund portfolio is tough for any payment bank. Also, we are not allowed to carry out direct lending activity. But just like other banks, we are mulling over unveiling various easy third-party loans and life insurance products within one year from now. For selling them, we may join hands with some banks or NBFCs (non-banking finance corporation),” said MD & CEO Shashi Arora at an event here on Thursday.
On why bringing in small merchants into its network would make a big business, Arora explained, “Only 1.2 million of the 14 million small traders in India have swipe machines.” Currently, the bank has one lakh merchants on board across India. It has already tied up with leading city retailers like Spencers, Khadims, Manyavar, Bazaar Kolkata and Bhojohori Manna for direct cashless transactions.
The newbie bank is also planning to cash in on its ‘nearby retail-cash outlet model’ in remote villages with an eye to beat its rival India Post’s zero-charge cash withdrawal offer, added Arora. Airtel Payments Bank charges 0.65% on each ‘biometric system-based’ cash withdrawal from its retail outlets. Retailers at banking points get 0.15% on each transaction from the bank.
“Our competitors might have different strategy to earn revenue, but we want to use our retail outreach strength to take basic banking services to the doorstep of every account holders and woo more customers,” said Arora. The bank offers account opening via Aadhaar based e-KYC, a universal interest rate of 7.25% on any amount of savings, one minute of Airtel mobile talk-time for every rupee deposited first time and free personal accidental insurance of Rs 1 lakh with every account.
Airtel Payments Bank has opened around 20 lakh accounts in India via 2.5 lakh banking points. In Bengal, it has 21,000 banking points covering 100 villages while another one lakh will be added in a year’s time. Approximately, 70% of these accounts have been opened in rural areas.
Payments banks are required to park 75% of their total deposits in the government’s SLR securities and the balance 25% in other instruments (like bank FDs, company FDs, MFs and CRR etc) as prescribed by the RBI.