Payments Banks financial metrics take a downward turn, losses pile up

Reserve Bank of India along with the Indian government has been pushing forward the Digital India movement since 2014. Payments Banks were also an integral part of this financial inclusion movement.

However, for two years in a row now, this initiative has been costing the government and the banks significantly in the way of both increasing net and operating losses.

In the latest reported financial year, the consolidated financial statements of the payments banks platforms showed that the net loss took a 2.1X jump to Rs 516.15 crore from Rs 242.2 crore in FY17.

The payments banks are not even able to achieve profitability in the operating metrics, as losses have taken a higher jump of 2.2X from Rs 240.7 crore to Rs 522.1 crore in FY18. Interestingly, while in the previous fiscal operating losses were lower than net loss, this year the metrics have reversed, making matters more concerning.

As per experts, these financial reports have taken a downward spin due to the infrastructural development that requires a hefty investment. These expenses enable larger underpenetrated demographics to avail the services.

There are no positive signs even with regular banks taking technological advancement initiatives.

In the current fiscal as well, the first half showed negative profit columns, and the trend shall continue for several upcoming quarters, as per RBI’s statement given to ET.

On the other hand, all hope is not lost as several minor metrics showed positive growth. These include the share deposits of these banks that recorded a marginal increase to 9 per cent, from 5.7 per cent in previous fiscal. The net interest income took a hike from Rs 30.7 crore to Rs 151.1 crore.

The total of the balance sheet columns also increased from Rs 1,139.9 crore to Rs 4,891.6 crore in FY18. 

About 81 per cent of these transactions took place through internet-based digital mediums like mobiles and e-wallets.

There are 11 operational payments banks that have RBI’s approval to function in the market as of now. These include Aditya Birla Payments Bank, Airtel Payments Bank, India Post Payments Bank, Fino Payments Bank, Jio Payments Bank, and Paytm Payments Bank among others.

The information has originally been sourced via RBI's report on Trends and Progress of Banking in India: 2017-2018