Eyes a nationwide merchant ecosystem of over five million, plans to sell third-party financial products
As Bharti Airtel plans to acquire Telenor India, the former's payments banking arm has notched up an account holder base of 2 million in a little of a month's time since it was launched.
Airtel Payments Bank, country's first such entity to start operations last month, is a fully digital bank that plans to leverage its parent's telecom subscriber base and create a nationwide merchant ecosystem of over five million partners including small kirana stores, grocers, pharmacies and restaurants.
"We have been able to create around 2 million accounts within a month of operations. Bulk of the transactions we are seeing are coming from the rural areas; about two-third of customers are in the rural areas," said Shashi Arora, MD & CEO, Airtel Payments Bank.
The bank, an 80:20 joint venture between Bharti Airtel and Kotak Mahindra Bank, is also planning to sell third-party financial products to boost its revenue and expand services portfolio.
"At some stage, we would get into loans from banks or NBFCs," Arora said.
Airtel is targeting villages having poor conventional banking infrastructure where the payments bank is creating the ecosystem of banking services points.
The payments bank is offering an interest rate of 7.25% on deposits, which, for each customer, has been capped at Rs 1 lakh as per Reserve Bank of India licence norms. On the other hand, traditional banks offer a return of around 4% on savings deposits.
However, such a high interest rate might not be sustained for long, Arora indicated.
"The interest rate of 7.25% was clearly put to attract customers and to ensure that customers kind of find it lucrative enough to open a bank account. As time goes by and as interest rate changes, as all we know it goes up and down, we would take a call as to what happens to the interest rate. But as of now, it stays at 7.25%," he said while launching the bank's services in West Bengal.
Committing investment of Rs 3,000 crore across its national operations, Airtel Payments Bank currently has a network of over 2.5 lakh neighbourhood retail stores which also function as banking points. The payments bank plans to scale its network to 600,000 points.
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