Comments from Axis Bank, which also runs the payments company FreechargeCome amid debate over whether merchant discount rate (MDR) should be levied on the very popular is i platform. The government, which wants to popularize digital payments, is insisting that no fee should be imposed.
“What the government is doing is they are taking the entire P&L (profit and loss) opportunity for us. So if you look at the payment space, nobody can make any money in the country. Will have to use payments as a platform to make money elsewhere,” Choudhary said at the Global Fintech Fest here.
What is worrying is that more and more such demands will emerge, which will take away the revenue and profitability pool and only then the big entities can survive and the smaller players will struggle, he said.
The challenges posed by regulatory and government orders are not limited to payments, he said, pointing to difficulties in lending to the priority sector.PSL) Requirements.
“Regulators ask banks to do a lot of things that don’t make money for us, even though they fully understand that they need to allow us to do something where we fund a lot of sectors. make money where we don’t make money,” he said.
For example, Choudhary said, the 40 per cent PSL requirement for commercial banks has 15 sub-categories. Many of those fields make no money at all.
axis Bank He said that PSLs spend Rs 900 crore every year just to buy PSL certificates to meet the lending norms.
Given such a regulatory environment, the way forward is in partnership with big tech companies, he said. He said that his bank has already done such partnerships with Flipkart and Google and another partnership will be done soon.
He added that the next few years will see a number of partnerships across products that make it beneficial for all parties involved.