Paytm merchants huge opportunity but need NPCI approval: Yes Bank MD

Yes Bank sees a huge opportunity in acquiring merchants at Paytm Payments Bank but the National Payments Corporation of India (NPCI) must give a formal approval to the lender to onboard the crisis-ridden payment bank’s merchants, MD & CEO of the private sector bank, Prashant Kumar, told reporters.

“If you think about 10 million merchants (of the payments bank), if their flows are coming through you, and on an average even if it is Rs 25,000, just multiply it, it is a huge float for the bank,” he said. “On top of that, going forward you will have capability to cross sell and fill loan demand if needed, they can also open liability accounts,” he added.

On January 31, the RBI said that due to persistent non-compliance and continued material supervisory concerns, Paytm Payments Bank will not be able to accept further deposits, credit transactions or any top-ups in any customer accounts, prepaid instruments, wallet, FasTags, NCMC cards after February 29. The regulator later extended the deadline for the bank to stop accepting fresh deposits in its accounts and wallets by 15 days.  

Push for profitability  

Kumar said Yes Bank is focusing on expanding its low-cost current account and savings account (CASA) ratio from nearly 30% as on December 31, to 40% over a period of time, in order to improve the bank’s bottomline. Yes Bank’s overall deposits stood at Rs 2.41 trillion as on December 31, up 13% year-on-year (y-o-y).

Further, it aims to increase the share of high yielding retail loans in the overall loan book to improve margins. The commentary is in-line with Kumar’s comments earlier this week. In an interaction with FE, Kumar said the bank is moving into products where yields would be little higher. For example, changing loan mix from new car loan to used car loans and from prime home loan to affordable home loans would enhance yields.

Further, moving into the small and medium enterprises (SME) and mid-corporate segment will further boost the bank’s profitability, he said.

A big drag on Yes Bank’s profitability, Kumar said, was lack of priority sector loans (PSL) which led the bank to park funds in low-yielding rural infrastructure development fund (RIDF). However, the bank is now reaching 40% PSL compliance and going forward the lender needs to ensure having enough PSL exposure to avoid parking money in RIDF, which will thereby boost bottomline.

Yes Bank’s overall advances stood at `2.17 trillion as on December 31, up 12% y-o-y.