homefinance NewsWill insist on KYC if we onboard Paytm Payments Bank customers, and this transition can’t happen by Feb 29: Axis Bank's CEO
Will insist on KYC if we onboard Paytm Payments Bank customers, and this transition can’t happen by Feb 29: Axis Bank's CEO
The Axis Bank CEO clarified that there is no formal agreement in place with Paytm Payments Bank as of now.
Axis Bank's Managing Director and CEO Amitabh Chaudhary said on Tuesday (February 13) that regulatory approval from the Reserve Bank of India (RBI) is required for any possible takeover of Paytm Payments Bank (PPBL) merchants. Chaudhary emphasised this while sharing the banking industry's current challenges in general, and the bank's potential collaboration with Paytm.
However, the Axis Bank CEO, while talking to CNBC-TV18 in an interview, clarified that there is no formal agreement in place with Paytm Payments Bank as of now.
Taking an example to illustrate a hypothetical scenario, he discussed the process that would be involved if Paytm Payments Bank merchants were to be onboarded by Axis Bank, individual Know Your Customer (KYC) procedures would be a necessity.
Chaudhary acknowledged the time constraints associated with such an undertaking, mentioning that the KYC process cannot be completed by February 29.
Notably, RBI had directed Paytm Payments Bank to stop accepting deposits or top-ups in any customer accounts, wallets, FASTags and other instruments after February 29.
Chaudhary stressed that Axis Bank would seek permission from the RBI.
Highlighting the necessity for a well-defined plan that aligns with the RBI's vision, Chaudhary assured that Axis Bank would adhere to the regulatory guidelines diligently, and the bank is committed to a transparent and closely monitored process.
Chaudhary also drew attention to the potential disruptions in the market that could arise from such a collaboration, acknowledging Paytm Payment Bank's significant presence as a FinTech giant with a large customer base.
Despite potential challenges, he conveyed Axis Bank's readiness to support both its existing customer base and Paytm Payments Bank's clientele during the transition.
While the CEO indicated that discussions with Paytm Payments Bank were ongoing, he reiterated the pivotal role of RBI in shaping the outcome of any collaboration.
The Axis Bank CEO's comments came a day after he expressed the bank's openness to working with Paytm during the launch of Axis Bank’s '2023 Burgundy Private Hurun India 500' report.
RBI Governor Shaktikanta Das had recently ruled out a review of the central bank's actions against Paytm Payments Bank Ltd (PPBL).
During the interview with CNBC TV18, Chaudhary further shed light on the RBI's push for banks to slow down and the need for credit and deposit growth convergence.
He pointed out the challenges faced by banks, including geopolitical factors, fiscal consolidation, and monetary tightening.
Chaudhary stressed the significance of balancing credit and deposit growth, indicating that the current situation of high credit growth without adequate deposits is unsustainable.
Chaudhary highlighted the RBI's message to banks to manage the Credit-Deposit (CD) ratio and the increase in risk rates in certain asset classes.
He attributed the war for deposits to factors such as rising call rates, increased bulk deposit rates, and a relentless pursuit of growth by banks.
Expressing his views on the future, Chaudhary predicted that credit and deposit growth would eventually converge. He believed that the RBI's commitment to controlling inflation, coupled with tight liquidity, would result in prolonged higher interest rates.
As a consequence, he anticipated that credit growth would need to slow down or face increased interest rates in the future.
(Edited by : C H Unnikrishnan)
First Published: Feb 13, 2024 1:33 PM IST
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