Federal Bank plans to buy microfinance company to expand business – Times of India

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MUMBAI: Federal Bank MD & CEO Shyam Srinivasan has said that the private bank sees an opportunity to grow both organically and through acquisition. The bank is interested in acquiring a microfinance business as part of its focus on growing the retail high-margin category.
Speaking to TOI, Srinivasan said that Federal Bank is now on a par with any new-generation bank in terms of digital capability and operations and had sound asset quality due to its focus on retail. “Financially we have done very well. There are some metrics around return on asset (RoA) expansion that we are targeting. This essentially means a change in margin profile,” said Srinivasan.
Federal Bank had said that its RoA would grow from 0.76 to 1.25 in five years and were on course to achieve it, but Covid has delayed it by one year to FY23. The bank will also be launching its credit cards shortly and expanding personal loans.
According to Srinivasan, in the banking sector, half the market is concentrated among the top 7-8 lenders. The remaining 50% is highly fragmented with 17-18 banks having a 1% to 3% market share, which throws up consolidation opportunities. “In Kerala, we have a 17% share, but the state is only 3% of the market. Outside Kerala, we are 1%. In the long term, I see a huge opportunity for growth and consolidation,” he said.
Srinivasan said that Federal Bank has invested a lot in its platform and people, and now it was time to leverage the investment and capability. He said that to explore acquisition opportunities in microfinance, the bank would wait for a quarter as the current stand-still on the classification of loans as non-performing assets (NPAs) did not give a clear picture of asset quality.
Srinivasan, who was hired from StanChart Bank in 2010, adopted a strategy of ‘digital at the fore, human at the core’, which meant upscaling technology, going slow on branch expansion but expanding their footprint by having more customer-facing employees. Federal Bank has also many fintech partnerships. It is about to launch two neobank partnerships that will enable it to get access to a new segment of customers for its personal loans and credit card products.
In the last decade, the bank has raised capital only once through a Rs 2,500-crore qualified institutional placement in 2017. “We have been meeting our capital adequacy largely through internal accruals. This has led to a level of trust in the bank and, if Federal Bank comes to the market, there is good reason to believe that we will be able to raise the money,” said Srinivasan.

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PhonePe Continues to Lead UPI-Based Payments Market With Over 970mn Transactions in February 2021

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PhonePe continued to lead the UPI-based digital payments market in India in February 2021, with over 970 million transactions, the company announced earlier today. The digital payments firm adds that the platform clocked over 1.07 billion total transactions across UPI, cards and wallets on its platform  for the same period. The National Payments Corporation of India (NPCI) website shows that roughly 2,292 million UPI transactions worth Rs 4,25,062 crores took place in India last month, though the full report is yet to be shared. PhonePe’s domestic rival Paytm has also announced that the platform clocked more than 1.2 billion transactions in February 2021, posting a 15 percent month-on-month growth. In January 2021, Paytm Payments Bank took the third spot with 281.18 million UPI-based transactions worth Rs 33,909.50 crores.

PhonePe adds that its continuing success in the digital payments space is mainly attributed to the expansion across Tier 2 and Tier 3 cities, where the company seemingly digitised over 17.5 million Kirana stores. The e-payments company had previously announced its plans to digitise 25 million Kiranas by the end of 2021. Speaking more over the development, Sameer Nigam, Founder and chief officer at PhonePe said that the company continues to dominate industry metrics in terms of the active user base, active merchant-base, total transactions and TPV (total payment volume). “We are delighted to retain our pole position as the top digital payments platform in the country. I am very proud to report that PhonePe is leading across all core. We will continue to transform lives positively while building simple, scalable and innovative products for every Indian,” Nigam in the statement added.

PhonePe’s growth can be also attributed to the slew of updates the app has been adding since last year. Recently, the company partnered with Axis Bank on UPI multi-bank model, giving users an option to create and use multiple UPI IDs with an Axis Bank ID. Apart from this, PhonePe will start acquiring merchants with Axis Bank in addition to its partnership with YES Bank. It recently crossed the 275-million registered user milestone. It had over 100 million monthly active users generating over 1 billion digital payment transactions in January alone. It is targeting to surpass 500-million registered users by December 2022.


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