Pandemic helps Airtel drive growth for payments arm

Airtel Payments Bank digital banking
Airtel Payments Bank app. Image credit Airtel Payments Bank

Bharti Airtel’s payments arm aims to achieve break-even within the ongoing fiscal on the back of stronger revenue growth driven by new customer acquisitions and higher realisation per user from cross-selling products.

According to a report by PTI, the pandemic has emerged as the major growth driver for Airtel Payments Bank as more customers want convenient digital banking solutions as they move back to their homes in semi-urban and rural areas.

Airtel Payments Bank currently has a base of 55 million users across India. 

Airtel’s payment arm saw 60% year-on-year growth in savings accounts deposits, and its base of active revenue earning customers (RECs) grew more than 77% year-on-year to 55 million. Its revenue grew to Rs 627 crore ($84.73 million), up 32% year-on-year. 

However, APB’s losses for the full fiscal stood at about Rs 420 crore ($56.76 million), while losses in the January-March or Q4 quarter stood at nearly Rs 70 crore ($9.46 million). 

Airtel Payments Bank competes with the likes of Jio Payments Bank, Paytm Payment Bank, Fino Payments Bank and Indian Post Payments Bank. All these banks provide savings accounts, remittances and other payment options, but current regulations do not allow them to lend money.

“Airtel Payments Bank has built an adequate infrastructure, backed by investments in technology, to serve consumers and hence fixed costs and incremental investments are expected to remain in check,” a senior company official was quoted as saying by the newswire service. He added that the APB has now reached the “right level of scale” with its large base of users, which will help it break even this fiscal year.

He, however, added that Airtel Payment Bank’s losses nearly halved in Q4 of FY21 compared to the year ago period.

Airtel Payments Bank offers digital payments, money transfers, insurance, direct benefit transfer credits, Aadhaar-enabled payment system and collection management services. All these services are seeing “huge” traction in the country, the report added.

The payments bank’s managing director Anubrata Biswas recently told the Economic Times that innovations such as ‘Safe Pay’ are proving to be a major services differentiator in the market amid the Covid-19 pandemic as it helps customers to tackle fraudsters. 

“…APB has also become a large provider of cash collection services to institutions and companies and sees it as a big growth engine,” he told the financial newspaper. 

The payments company has created one of the largest retail networks with over 500,000 neighbourhood banking points. The PTI report said that Airtel Payments Bank is serving one in six villages in India.

In December last year, Bharti Enterprises chairman Sunil Mittal told media that Airtel might upgrade its payments bank licence to that of a small finance bank to enter the lending business and attract larger deposits. As per company officials, the move will help APB use deposits from users “more profitably”.

Mittal, however, didn’t share a timeframe for the same. 

Airtel Payments Bank announced its customers would get an increased interest rate of 6% per annum on savings account deposits of over Rs 1 lakh ($1342). It offers a 2.5% interest rate per annum for a deposit up to Rs 1 lakh.

Related article: Bharti Airtel commits $441m to launch payments bank

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