May-2015
May-2015
May-2015
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
BANKING<br />
PAYMENT BANKS WILL PROVIDE THE RURAL AND<br />
UNBANKED POPULATION ACCESS TO WEALTH<br />
CREATION AND REMITTANCE SERVICES THROUGH<br />
TECHNOLOGY DRIVEN LOW COST TRANSACTION MODEL<br />
• Telecom Firms and MNOs: They have an advantage<br />
over other aspirants because they already have distribution<br />
infrastructure in rural areas and technology<br />
suitable to run the operation of PB. PB is somewhat<br />
tailor-made for Telecom firms. Leading operators are<br />
already offering ‘M-Wallet’ services for remittances. So,<br />
setting up PB will be a natural extension of business for<br />
telecom firms.<br />
• Indian Post: The nature and character of PB as enshrined<br />
in the RBI guideline suit the Indian Post as<br />
it already has the branches in the rural areas and doing<br />
the similar sort of business for long. With the decline in<br />
handling post, Indian Post could see a big opportunity<br />
in converting their business model in favour of PB.<br />
• Retail Chains: Retail chains get indirect benefits for<br />
more customer stickiness and higher wallet share.<br />
Those with a true experience of handling payments<br />
on a large scale using a strong technology backbone<br />
may get benefit out of the scheme.<br />
• Large Business Correspondents of Banks: According to<br />
KPMG, large BC have an edge in running PB because<br />
of their experience in mobilizing deposits as agents<br />
of banks and they have a good understanding of local<br />
economy.<br />
• Conglomerates: A captive PB can help the conglomerates<br />
like Reliance and AV Birla Group to process large<br />
number of payment transactions at their retail outlets<br />
and group companies in the form of payment to suppliers,<br />
salary to employees, dividend, interest, etc. They<br />
also have telecom arm which will facilitate the operation<br />
of PB model.<br />
Prospect and Challenges of Payment Bank in India<br />
The demographic pattern of India and its changing profile<br />
offer a host of opportunities for the PB aspirants.<br />
These are as follows:<br />
• According to KPMG, about 40 – 50 percent of India’s<br />
1.2 billion populations is eligible to open a bank<br />
account but still unbanked. India’s 937 million mobile<br />
subscribers, on the other hand, substantially outnumber<br />
those with bank accounts. Besides, the urban population<br />
is going to jump over the next 25 years – from the<br />
current 26% to between 36 – 50% of the total population.<br />
All these signify the big opportunity that PB<br />
aspirants are eying at.<br />
• Secondly, payment and remittance market for semi-urban<br />
and rural areas offer a huge opportunity for the PB.<br />
According to a Crisil report Rs. 80000 crore to 90000<br />
crore domestic remittances market for the low-income<br />
migrant population will grow at 11 – 13% CAGR<br />
in the next few years. This segment is expected to be<br />
among the early users of PB.<br />
• Thirdly, the easy access, cost effective means and the<br />
comfort of operation arising out of simple and hassle<br />
free formalities will induce the large urban population<br />
to remit money to their family and relatives living in<br />
rural India.<br />
• Fourth, there is also a big opportunity in the distribution<br />
of third-party products especially insurance and<br />
mutual fund schemes as the insurance market is ex-<br />
92 the MANAGEMENT ACCOUNTANT MAY <strong>2015</strong><br />
www.icmai.in