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India’s largest private sector lender HDFC Bank today reported a 24% growth in consolidated net profit to Rs 10,474 crore, in line with expectations pinned by most analysts. The bank’s profit soared when compared to the previous year but was marginally lower sequentially. Net interest income was also higher and provisions were lower from the previous year, as anticipated by the street. HDFC Bank commands an 11% market share in the banking sector, second only to public sector lender, State Bank of India (SBI). HDFC Bank shares fell during this week’s holiday-shortened trading sessions, down 3.34% to settle at Rs 1,464 per share.
The lender reported that its gross non-performing assets were at 1.17% of the gross advances at the end of March 2022, down from 1.26% in the previous quarter and 1.32% in the year-ago period. Net non-performing assets were at 0.32% of net advances. The core net interest margin was at 4% on total assets.
Net profit (Consolidated) – Rs 10,474 crore
Net Interest Income – Rs 18,872 crore, up 10.2% from the previous year
Total Provisions – Rs 4,693 crore
Total deposits – Rs 15,59,217 crore, a 16.8% on-year increase
Total advances Rs 13,68821 crore, up 20.8% from the previous year.
HDFC Bank said that its retail loans grew by 15.2% while commercial and rural banking loans grew by 30.4%. Corporate and other wholesale loans were up by 17.4%.
Subsidiary of HDFC Bank, HDFC Securities Limited, saw a 16% on-year increase in total income to Rs 509 crore but net profit was lower at Rs 235.6 crore as against Rs 244.5 crore a year ago. HDB Financial Services Limited, another subsidiary of HDFC Bank, saw a 7.9% growth in revenue and a decline in net profit.
HDFC Bank said that it added 563 branches and 7,167 employees during the January-march quarter and 734 branches and 21,468 employees during the year. Operating expenses for the quarter stood at Rs 10,152.8 crore, up 10.6% from the year-ago period.
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The funds had shown interest and the government wants to confirm their participation, said officials involved in the offer. ET had reported earlier this week that the IPO is likely to be held toward the end of this month.
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The Income Tax (I-T) department on Friday confiscated fugitive diamantaire Mehul Choksi's properties in Nashik, news agency ANI reported. The tax department has taken over 9 acres of agricultural land in Nashik that belongs to Choksi. He is accused in the Rs 13,500 crore Punjab National Bank (PNB) scam, along with nephew Nirav Modi.
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The bank has sought the approval of its shareholders through a postal ballot which started on April 6 and will end on May 5, 2022, to pass the ordinary resolution, among others. The lender, in which LIC holds a majority stake, will declare the results of the postal ballot on or before May 7, 2022.
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The People's Bank of China (PBOC) said it was keeping the rate on 150 billion yuan ($23.52 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions unchanged at 2.85% from the previous operation, to "maintain banking system liquidity reasonably ample", according to an online statement.
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Experts said that Dheeraj Wadhawan's likely insolvency would be among the handful of high-profile personal bankruptcy cases, such as that against Anil Ambani, to reach the NCLT. The outcome in this case would have a bearing on the personal insolvency proceedings against Anil Ambani, the former promoter of Reliance Communications and Reliance Capital. It will be closely watched as the judgment could decide the fates of several other defaulting promoters, too.
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A notification issued by the finance ministry on April 13 said that for NICL the authorised capital will now be ₹15,000 crore, for OICL it will be ₹7,500 crore and for UICL, authorised capital has been raised to ₹7,500 crore from ₹5,000 crore.
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Kotak's stand could deal a blow to the unregulated industry. It follows digital wallet MobiKwik reportedly snapping its links with crypto-related payments since the beginning of April.
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Large non-banking financial companies (NBFCs) are in favour of living with the new regulatory regime for a few quarters before deciding on any moves in the direction of consolidation. Some of these companies are owned by conglomerates with interests in non-financial businesses, and converting into a bank is not an option for them under the current licensing regime.
Reserve Bank of India (RBI) governor Shaktikanta Das recently said it is up to NBFCs to make their own choices with respect to their future. “Given the scale-based regulations for NBFCs which are now introduced and given our current status with regard to the bank licensing policy, it is for large NBFCs to take their own commercial decisions about future, whether they want to continue as it is,” Das said.
Analysts are of the view that the increasing convergence between bank and NBFC regulations and the recent merger between Housing Development Finance Corporation (HDFC) and HDFC Bank may force a round of consolidation in the sector. However, non-bank lenders that FE spoke to said they would take some time for the new regulatory framework to become fully effective.
Ramesh Iyer, vice-chairman & managing director, Mahindra Finance, said it is early days to talk about converting into a bank just because there has been some regulatory tightening. Rather, it would be better to watch what steps the RBI takes to strengthen and support NBFCs after October 2022, when the scale-based regulation framework becomes effective. “After taking various steps to strengthen asset quality, I believe further steps would be taken to strengthen liquidity support. The industry has been requesting for setting up a refinancing institution for NBFCs.”
Other large players say there is a difference in the target audiences of banks and NBFCs and what worked for the HDFC group may not be the best option for others. Umesh Revankar, vice chairman & MD, Shriram Transport Finance Company, said: “We believe that there is enough scope and opportunity for NBFCs as they work in a different market where banks are not present or partially participate. That’s not going to change.”
If regulations for large NBFCs force a change, companies will adapt to follow them, Revankar said, adding that his company will not be looking for inorganic growth at this stage. “We are already carrying out an in-house merger between Shriram City Union and Shriram Transport,” he said.
In a recent report, Fitch Ratings said the merger of the HDFC twins could influence the evolution of the NBFC sector, particularly for large entities that have nurtured banking ambitions amid tightening sector regulations. “Large NBFIs could be acquisition targets (for banks), given their higher-margin products, large pools of priority-sector customers and loans, and potential cross-selling opportunities. However, the regulatory attitude towards such acquisitions will be an important factor in their success,” the rating agency said.
However, it is unclear whether large conglomerates owning NBFCs will be unwilling to let go of their companies. In response to a question from an investor on whether Bajaj Finance plans to convert to a bank, the company’s management said after its Q3FY22 results there was no such plan at present. “RBI came out with their guidelines, it’s up for the shareholders to decide and we as management will follow what shareholders decide,” Bajaj Finance MD Rajeev Jain said.
In the meantime, as they adjust to the new regulations, the industry continues to speak to the regulator for some easing in the norms. One of them is with regard to the asset quality recognition. “Borrowers with loans of under Rs 2 crore who are small truck operators or tractor operators, for them the due date of a month is just indicative, and they pay anytime during the month,” Iyer said. The industry has requested that if the borrower repays during the same month, they should be allowed not to be treated as a non-performing asset.
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The World Bank on Wednesday lowered India's GDP growth estimate for FY23 to 8% from 8.7%, citing the impact of the war in Ukraine, high global oil prices, elevated inflation and supply disruptions.
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As per the RFRP, sources said, the consortium cluster bidders have to submit bids on an all-cash basis, but it gives an option to the bidders at the company level to put in bids either on an all-cash or deferred payment basis.
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The National Payments Corporation of India (NPCI) on Wednesday said it has allowed WhatsApp to enable Unified Payments Interface (UPI) payments to an additional 60 million users, taking the total user base to 100 million. The UPI payments feature had gone live on the Meta-owned Whatsapp in November 2020 for 20 million users; the cap on the user base was later raised to 40 million in November 2021. In March WhatsApp was used for making 2.54 million UPI transactions worth Rs 239.78 crore. It accounted for 0.05% of UPI transactions in terms of volumes and 0.025% by value. PhonePe is the leading UPI app, with 2.5 billion transactions in March, followed by Google Pay, which recorded 1.8 billion transactions during the month.
Payment industry executives say that the company is yet to begin acquiring merchants aggressively to enable peer-to-merchant (P2M) transactions. There has also been little marketing buzz around the payment feature. Moreover, a majority of WhatsApp’s 400 million-strong user base in India lacks access to the payment option. In December 2020, the company had said it had about 15 million users on its WhatsApp for Business app, designed specifically for the kirana shop owner. In 2019, the company released catalogues for shop owners to showcase their products to their customers and in 2020, it added more new features to the business app.
Further, WhatsApp had announced its plans to enable the sale of “sachet-sized” health insurance products through its platform. The messaging giant was also running pilots in the areas of micro-pension, edtech and agritech, said Abhijit Bose, head of WhatsApp India, speaking at Facebook’s Fuel for India event in December 2020.
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With the Reserve Bank of India prioritising inflation over growth, the repo rate is likely to be hiked by at least 25 basis points in June, SBI's Ecowrap report said on Wednesday. In its monetary policy announced last week, the RBI had left the repo rate unchanged at 4 per cent.
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Domestic indices rose on Wednesday as oil and gas explorers rallied on supply concerns, while a red hot inflation reading for March fuelled expectations for an interest rate hike in June. Retail inflation accelerated to near 7% year-on-year in March, its highest in 17 months and above the upper limit of the central bank's tolerance band for a third straight month.
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The National Payments Corporation of India (NPCI) has asked all banks, payment service providers (PSPs) & third-party application providers (TPAPs) to implement an online dispute resolution system by September 2022, failing which it will ban the onboarding of new customers.
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“RBI data shows total developmental expenditure incurred by Modi Govt in 2014-22 was Rs 90.9 lakh cr, far higher than is being alleged by some sections of the Opposition,” finance minister Nirmala Sitharaman tweeted.
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The proposed merger of HDFC Bank and HDFC Ltd and the recently announced acquisition of Citibank India’s consumer business by Axis Bank could encourage banks to turn to merger and acquisition (M&A), Fitch Ratings said in a report. It added banks could target large non-banking financial institutions (NBFIs) due to their higher-margin products, large pools of priority-sector customers and loans, and potential cross-selling opportunities.
“The proposed merger could redefine the competitive landscape for banks and increase the prominence of M&A among banks seeking to close the market-share gap with the merged HDFC Bank. It could also influence the evolution of the NBFI sector, particularly for large entities that have nurtured banking ambitions amid tightening sector regulations,” Fitch said in a statement.
However, the regulatory attitude towards such acquisitions will be an important factor in their success. The merger between two large entities may have long-term implications for the country’s banking and NBFI sectors. The rating agency’s commentary comes days after the merger of two large entities of the sector.
The combined HDFC entity will have an asset base of $340 billion, nearly half the size of State Bank of India and double its nearest competitor, ICICI Bank. It will account for nearly 14% of system loans and 9% of system deposits, — a roughly 300 basis points jump in loan market share and about 100 basis points for deposits from the standalone HDFC Bank.
According to Fitch, both entities stand to gain from the deal. HDFC Bank will gain about 500 new branches, improve its operating efficiency as HDFC Ltd’s cost to income ratio is 10% versus the bank’s 36%, and diversify its loan book as the bulk of the loans will be mortgages. HDFC will benefit from greater liquidity and a gradual shift to lower-cost deposits to support a more competitive offering in the large-ticket housing space. Last month, Axis Bank announced the acquisition of CitiBank’s India retail business, including banking, credit cards, home loans and wealth management at $1.6 billion.
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SP group, which had claimed ₹200 crore from RHFL, is likely to agree on a settlement amount of about ₹35-40 crore, one of the persons quoted earlier, said. Once the settlement is reached, the company will file a memorandum of consent with the Delhi High Court.
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The proposal assumes significance in the wake of data security and other regulations on one hand, and the urgency felt by traditional banks to innovate with fintech firms challenging the conventional operating models and commercial structures.
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Godrej Industries on Monday announced the launch of its financial services subsidiary Godrej Capital, which will be the holding company for mortgage lender Godrej Housing Finance and non-banking finance company (NBFC) Godrej Finance. Godrej Capital intends to grow its balance sheet to Rs 30,000 crore in 2026 from Rs 1,800 crore at present.
The Godrej Group, which has interests in consumer goods, agri, real estate and retail, is the newest conglomerate to enter the financial services space. While Godrej Housing Finance was launched in November 2020, the group is only now going for an NBFC launch using a licence it has held since 1998.
Pirojsha Godrej, chairman, Godrej Capital, said that with the benefit of hindsight, the group should have moved to the financial services opportunity more quickly. “Over the last few years, we have been more focused, as a group, on streamlining our presence and making sure that the business spaces we are in, we have leadership or a very strong position,” Godrej said.
He added: “We now feel ready and we have the appetite to invest. We believe there is clear logic and path in creating a strong position in this space. And that’s why we are now investing in it.”
In order to achieve its growth target, Godrej Capital will need Rs 5,000 crore of capital by 2026, which will come from within the Group. By the end of April 2022, Rs 1,500 crore of this investment will have already been made, Godrej said.
The company will continue to maintain its focus on the growth of secured loans, consisting of home loans and loans against property (LAP). In addition, it will also foray into cashflow-based lending to small businesses. It will be headed by Manish Shah, currently MD & CEO of Godrej Housing Finance.
Godrej Capital currently has a presence across Mumbai, Bengaluru, Delhi NCR, Ahmedabad and Pune, and will soon be operational in six new cities – Jaipur, Chandigarh, Hyderabad, Chennai, Indore and Surat. It plans to grow its team by 50% to approximately 500 people in FY23.
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The Supreme Court on Monday stayed the National Company Law Appellate Tribunal’s order that asked the lenders of erstwhile Dewan Housing Finance (DHFL) to relook into certain parts of the resolution plan (RP) of Piramal Capital and Housing Finance which ascribed a value of only Rs 1 to Rs 45,000 crore worth of bad loans (avoidance transactions) of DHFL.
Piramal Capital and the DHFL’s committee of creditors led by Union Bank of India had challenged the NCLAT January 22 decision because it misinterpreted Insolvency and Bankruptcy Code (IBC). Former promoter Kapil Wadhawan and others had also challenged the resolution plan, saying Piramal acquired the Rs 90,000-crore company for just Rs 37,000 crore.
A bench headed by Chief Justice NV Ramana admitted the three appeals and stayed the NCLAT order. It posted the matter for a final hearing on May 5.
DHFL had collapsed after it failed to repay its debt worth Rs 90,000 crore to the lenders and was sent for debt resolution under the IBC in November 2019. The total value of future recoveries from such avoidance applications allegedly stands at around Rs 45,000 crore.
Lenders in their appeal told the apex court that the NCLAT had incorrectly held that it is not within the commercial wisdom of the CoC to decide the treatment of recoveries from avoidance applications. The CoC said that the January order that set aside a part of the RP in respect of recoveries from avoidance applications filed under Sections 43-51 and 66 was “bad in law, unimplementable and unsustainable” as it was premised on “incorrect findings in law and failed to interpret judicial precedents in the correct form.”
The recoveries under Section 66 of the IBC are to be returned to the corporate debtor as its asset, Solicitor General Tushar Mehta, appearing for CoC, said, adding that most of these transactions by the former management were irregular or fraudulent, and the banks did not expect to get any money out of it.
Stating that the proceeds from avoidance applications will be shared between the CoC and it, Piramal told the SC that such tinkering, alteration, modification of its approved RP at the appellate stage was “illegal, and contrary to the statute and established law” and “the commercial wisdom of the CoC should not be second-guessed except in case of the rarest of the rare perversity…”
The CoC had approved its RP with a 93.65% majority vote with the affirmative vote of 63 Moons Technologies, senior counsel AM Singhvi, appearing for Piramal, said, adding that the concept of ascribing a notional value of Rs 1 to uncertain recoveries and/ or where it is difficult to assess the actual value is not only within the commercial wisdom of the CoC but is also upheld by the SC in the case of CoC of Essar Steel India vs Satish Kumar Gupta.
“The notional value of Rs 1 cannot be seen in isolation and must be looked at with the other parts of the RP, which provides for an aggregate value of Rs 37,250 crore including cash and non-cash consideration which factors in the possible recoveries that may arise out of the Section 66 recoveries,” the appeal stated.
63 Moons Technologies, which had Rs 200 crore of debt exposure in DHFL, opposed the appeals, arguing that the CoC’s decision to grant the recovery rights to Piramal at `1 notional value was wrong. “If banks did not expect a single penny out of the avoidance transactions, why are they standing between the recovery and 63 Moons… Piramal is trying to appropriate massive recoveries of Rs 45,000 crore at Rs 1 notional value. We are 50,000 individual creditors and are getting just 23 paise per rupee,” senior counsel Mukul Rohtagi, on behalf of 63 Moons Technologies, argued.
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The Godrej Group’s Rs 5,000-crore investment in financial services could be among the largest it has made in a group company, Pirojsha Godrej, chairman of Godrej Capital, and Manish Shah, MD & CEO of Godrej Housing Finance, told Shritama Bose. The group is entering the lending space on the assumption that a banking licence is not an option at this stage, and arriving late has its own advantages, they said. Edited excerpts:
Regulations for banks and NBFCs are converging. What does it mean for a player like you?
MS: It’s a large move to formalisation. Saying that arbitrage or any unintended benefit because they chose not to regulate it is gone, is actually quite welcome. I don’t think the big opportunity was that there is this great arbitrage as a non-bank that allows you to compete against banks. I think the opportunity very much remains that you’ve got segments and markets that aren’t served well enough. You’ve got a clear opportunity to get in there. One thing it does, at least for people like us, is that it’s getting harder and harder for groups without strong balance sheets. The ability to bring in long-term patient capital is a challenge that’s getting much more real. What you were allowed to get away with while you were still small, as we go through our first set of inspections, it’s quite welcome that we are governed as if we are large already or are going to be large soon. They have come up with clear scale-based regulation and you know what to expect when you reach your next milestone.
Will you eventually look at a banking licence?
PG: No, I don’t think so. First of all, let’s see how the regulatory environment around that proceeds. Right now, I don’t think that’s even an option. While there is some convergence that perhaps is to banks’ advantage, we think that an NBFC’s advantages are considerable as well. We’ve gone into this business assuming a banking licence is not an option. If at any stage it becomes an option, obviously we would evaluate the pros and cons then. We are quite confident that in its current format, this is a huge opportunity for the group, which is why we’ve intended to go there. We are quite late in this industry, but that provides its own advantages as you can see what works and what doesn’t. The market is big and it is growing enough that we feel it’s not going to be hard for us to scale. Taking the right steps in terms of risk is much more important for us, because scale in this industry with our brand and the opportunities do not seem too challenging.
Would you also consider an insurance or mutual fund play within Godrej Capital?
PG: Not at the moment, but we’ll keep our eyes and ears open. As we establish initial success, we could venture into segments of other financial services. But, we quite intentionally didn’t want to do it in a way where we start five-six different products all across the country, and the ability of any business to do it well then really deteriorates. We’ll have a strong focus on first establishing ourselves in each of these sub-verticals, and then expanding it makes a little bit more sense. Godrej Capital is our financial services entity and as we enter new products and business lines, we may have different operating entities. The group probably has never invested as much as Rs 5,000 crore in a business. It has allowed businesses to self-fund their growth. We see it (financial services) as a very meaningful part of the Godrej Group’s scale five or 10 years from now.
Will you look to raise retail deposits at some point?
PG: We’ll study what the regulations allow. We did that in the past in various group companies. So we’d be open to that, but access to competitive-cost capital is one of the key advantages the group has had for all its companies and is certainly one of the things that gives us confidence to be competitive in this sector.
You’re looking at cash flow-based lending to SMEs. Would that eventually mean – CV or equipment finance as well?
MS: There are segments where we want to go in. That could take more than one form of plain simple term finance or maybe going into invoice discounting, supply chain finance and make it work in a given ecosystem. Right now, we’ve clubbed it under this one big umbrella, called cash flow-based unsecured, but it could have many shoots. One of the benefits of coming in at this time is that we will definitely be ready when an OCEN (Open Credit Enablement Network) comes in, and we’d love to partner with various LSPs (loan service providers) and plug into those networks.
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Bad loan ratios will decline because of recoveries or write-offs of legacy problem loans while the formation of new stressed loans will stabilise as the economy recovers.
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Motilal Oswal expects NBFCs under its coverage to report a year-on-year net profit growth of 32% led by Bajaj Finance, Cholamandalam Investment and Finance, L&T Finance and LIC Housing Finance (LICHF). It expects higher credit costs to hurt Mahindra & Mahindra Financial Services, which could impact its earnings.=
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The arrested individual has been identified as Alankar Khare, who was produced before a local court that remanded him to police custody for two days.
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The offer, which equates to a recovery of 50% for the state-owned bank, has triggered a Swiss challenge auction which is scheduled for April 30. VVF (India) has borrowings of ₹1,400 crore, according to a credit rating report by Crisil Ltd.
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Reserve Bank of India (RBI) on Monday introduced certain principles, standards and procedures for mid and large non-banking financial companies.The revised regulatory framework for NBFCs, issued in October 2021, had indicated that such entities in the upper layer (NBFC-UL) and middle layer (NBFC-ML) would be required to have an independent compliance function and a chief compliance officer (CCO).
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Asian shares slipped on Monday ahead of a week packed with central bank meetings and US inflation data, while the euro eked out a gain on relief the far right did not win the first round of the French presidential elections.
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Citibank India has written to its consumer clients, seeking to reassure them of there being no immediate change to any products. In a letter dated March 31, the bank told its customers Axis Bank’s acquisition of its consumer businesses is likely to close in the first half of calendar year 2023.
It is crucial for Citi to minimise the erosion of its retail customer base during the eight to 12-month transition period, since the agreement with Axis Bank includes clawback terms to account for a higher-than-expected attrition in the foreign lender’s customer and employee base. The deal value of $1.6 billion (Rs 12,325 crore) is subject to renegotiation in such a scenario. Axis Bank will be shelling out an additional Rs 1,500 crore to pay for the cost of transition, most of which will go to Citi.
“Let us reassure you, once again, that there will be no immediate change to any product you hold with us, be it credit cards, loans, deposits, investments, or any others. All our consumer banking operations including our call centers, ATMs, relationship teams, branches, Citibank online portal and the Citi mobile application, shall continue to operate as they do today,” Arjun Chowdhry, country business manager — global consumer bank, Citibank India, said in the letter to customers.
The announcement of the deal is only the start of a process, Chowdhry said in the letter, and while there will be a transition, the bank shall ensure that it is done in as seamless a manner as possible. “We will ensure you are duly informed of all relevant changes to your services and products, with adequate advance notice,” the letter said.
An email seeking an official response from Citi remained unanswered till the time of going to press.
Retention of personnel and the premium customer base of Citi’s India business are key to the deal making sense for Axis. Sections of the market have viewed the deal as an expensive bet on Axis Bank’s part. After the announcement of the deal, analysts at Jefferies wrote that Axis’s common equity tier-1 (CET1) capital adequacy ratio will slip to 12.8% from 15.3% in December 2021, which is materially lower than the 16-17% average for other private banks.
“The all-inclusive cost of acquisition implies 21x PE (price-to-earnings) on FY20 normalised earnings, which, in our view, is at a premium as Citibank’s standalone growth has been modest in India,” Jefferies said.
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As many as 54 bids were received for the resolution of RCL and its multiple subsidiaries as of March 25, which was the last date for submission of Expressions of Interest (EoI). Of those, around 22 EoIs are for RCL as a company, while the rest are for individual or a combination of the company's eight subsidiaries, sources said.
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Finance Minister Nirmala Sitharaman is scheduled to meet heads of public sector banks (PSBs) on April 23 to review performance of the lenders and progress made by them on various schemes launched by the government for revival of the economy battered by the pandemic.
This is the first full review meeting after presentation of Budget 2022-23. Banks would be urged to sanction loans for productive sectors to accelerate revival of the economy, sources said.
According to sources, there would be a comprehensive review of various segments and progress in government schemes including Emergency Credit Line Guarantee Scheme (ECLGS).
In the Budget, ECLGS was extended by a year till March 2023. Further, the guarantee cover for the scheme was expanded by Rs 50,000 crore to Rs 5 lakh crore. The coverage, scope and extent of benefits under ECLGS 3.0 pertaining to hospitality, travel, tourism and civil aviation sectors were expanded.
Also, the credit limit for eligible borrowers was increased to 50 per cent of their fund-based credit outstanding from 40 per cent earlier. The enhanced limit is subject to a maximum of Rs 200 crore per borrower.
Since its launch in May 2020, loans worth Rs 3.19 lakh crore have been sanction till March 25, 2022. About 95 per cent of the guarantees issued are for loans sanctioned to micro, small and medium enterprises.
The meeting to be held in New Delhi would set the agenda for the current financial year which has just started. During last financial year, no PSBs faced any loss in the April-December period and clocked a collective net profit of Rs 48,874 crore during the period.
PSBs earned a combined net profit of Rs 31,820 crore in 2020-21. However, there were collective losses for five straight years during 2015-16 to 2019-20. The highest amount of net loss was registered in 2017-18 at Rs 85,370 crore, followed by Rs 66,636 crore in 2018-19; Rs 25,941 crore in 2019-20; Rs 17,993 crore in 2015-16 and Rs 11,389 crore in 2016-17.
During 2009-10 to 2014-15, PSBs were earning profits on their books.
To improve financial health of PSBs, the government implemented a comprehensive 4Rs strategy — recognition of NPAs transparently, resolution and recovery of value from stressed accounts, recapitalising of PSBs, and reforms in PSBs and the wider financial ecosystem — for a responsible and clean system. Comprehensive steps were taken under the 4Rs strategy to reduce NPAs of PSBs.
As part of the strategy, the government has infused Rs 3,10,997 crore to recapitalise banks during the last five financial years — from 2016-17 to 2020-21, out of which Rs 34,997 crore were sourced through budgetary allocation and Rs 2,76,000 crore through issuance of recapitalisation bonds to these banks.
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Putting behind the controversy around its co-founder Ashneer Grover, fintech startup BharatPe has posted record growth in the fiscal year ended March 31 and is on track to break even and list on stock exchanges in the next 18-24 months, its CEO Suhail Sameer said.
In an interview with PTI, he said while the board will take a call on what to do with the money allegedly defrauded by Grover, his priority is the firm’s employees so that they stay focused and teams remain stable.
“Second focus is to keep firing on the business front. From a long term point of view, that’s all that will matter for me, for my teams. I am just doubling down on these things,” he said. And that focus has paid off well.
“Business in the last quarter (January-March) is up 20 per cent on every metric — transactions, TPV, loans facilitated, and revenue. And this is despite January being (hit by) COVID and everything was slowing a bit. Delhi was shut, many cities had weekend curfews,” he said.
BharatPe, which allows shop owners to make digital payments through QR codes, is now in 225 cities (more than 2x growth from last fiscal) and has over 8 million merchants onboard (up from 5 million in FY21 that ended on March 31, 2021).
“Transaction value (TPV) has grown 2.5x year-on-year to USD 16 billion in 2021-22 (April 2021 to March 2022). POS (point of sale) business is also 2x up from last year with over 1.25 lakh POS machines deployed. We do USD 4 billion transactions on it, as of March,” he said. Number of merchants who availed loans has increased to 3 lakh from 1.6 lakh a year back.
“How much loan facilitated — exactly 3x. We facilitated USD 650 million of loans last year (FY22),” he said.
PostPe, the buy-now-pay-later product the company launched five months back, is doing a million transactions a month and USD 50 million a month TPV.
“Overall from the company point of view, revenue has grown nearly four times y-o-y. And we will exit the year at a USD 110 million annualised run rate as compared to USD 31-32 million (last year),” he said. “From USD 6 million, we have become USD 110 million in 18-20 months.” In the current fiscal year, BharatPe is looking at an 85 per cent jump in TVP to USD 30 billion, scaling up loans facilitated to USD 2 billion.
“Last 2-3 years were sort of network expansion, next 2-3 years we will continue to grow the network but sort of double down on lending. PostPe will be scaled up 4x — from USD 50 million TPV to USD 200 million TPV. Seems like a big number (but) I am confident we will get there.” Revenue in the current fiscal is seen growing to USD 300 million, and merchant base increasing to 12 million.
“Currently, we facilitate loans worth around Rs 800 crore a month. Want to take that to Rs 2,050 crore a month by March 2023,” he said.
BharatPe is looking to expand to 300 cities by end of FY23 and take its gold loan offering to 20 cities by the end of 2022. BharatPe last month stripped Grover of all titles and positions after a third-party audit alleged grave governance lapses under him. But that has not stopped the bickering between him and the company management, including the CEO.
Sameer said the board will take a call on what to do with the audit report that has been received. “I am focused on business.” He further said the company is looking at an initial public offering (IPO) in 18-24 months, by when the TPV would have grown to USD 40-45 billion, with revenue at USD 500 million.
“Merchant business would become profitable in 12-15 months.” In preparation for the IPO, BharatPe will look for deeper products. “We initially used to do unsecured loans with our NBFC partners, then we launched secured loans, gold a few months back, and now we want to launch auto loans at some point of time,” he said, adding the firm would look to enable merchants to do customer acquisition.
“Thanks to the commitment and hard work by our world class team, BharatPe registered the strongest quarter in its history. We have registered 4x growth in our overall revenue over the same period last year. On a sequential quarter-on-quarter basis, the growth has been 30 per cent, despite the third wave of COVID-19.
“Comparing month-on-month, all our metrics have grown at the fastest pace — merchant total payments value or TPV (17 per cent), consumer TPV (39 per cent), loans facilitated (31 per cent), and revenue (21 per cent) in March 2022 over February 2022,” he pointed out.
Going forward, “we are tracking well to break even on our merchant business and further strengthen our consumer business,” he said. Asked about fundraising, he said BharatPe has USD 400 million in the bank and has a monthly burn of USD 4 million, so it does not need to raise capital.
12:02 AM
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