Paytm Payments Bank mobile banking market share down to 18% from 26% in Feb

At a time when mobile banking transactions have been witnessing an unprecedented rise, Vijay Shekhar Sharma-led Paytm Payment Bank's (PPB) market share in mobile-banking volumes is going downward.

According to RBI mobile banking transactions data, PPB recorded 133 million of a total 739 million mobile-banking transactions made during February 2019. This is 8% less than the figure given in February last year, which was about 26% mobile-banking volume.

This is despite mobile-banking volumes witnessed an unparallel rise of over 200% to 739 million in February 2019 from 223.25 million in February 2018.

Though, Paytm was not single payment bank that witnessed downfall. State Bank of India (SBI) also saw 130 million transactions, which accounted for 17.6% of the market, from 18.35% February last year.

Airtel Payments Bank had registered 39 million transactions in Feb this year, claiming over 5% market share of total volumes. Airtel's data of last year Feb was not published by the RBI.

Meanwhile, in December last year, it was barred from adding new customer using Aadhaar. After six months it got permission to onboard new customers.
HDFC Bank emerged as the biggest gainer in the mobile banking market share in this period. The company's market share went to 6.65% from 1.59%.

Traditional banks continue to dominate the market in terms of the transaction value. Axis Bank was the market leader with 17.2%, whereas HDFC and SBI followed with 14.56% and 14.51% respectively.

In November 2017, Paytm had launched PPB. It allowed customers to keep balance limit of up to 1 lakh in savings accounts.

Over the years, UIDAI and RBI have been keeping a close watch on Payment Banks.

PPB also came under RBI scrutiny for its ownership structure, where  Paytm founder Sharma holds 51% of shares and rest is owned by One97 Communications Ltd. and its other subsidiaries. It later made repeated submissions to the government convincing that PPB has independent operations from its parent.

In August last year, RBI had barred PPB to onboard new customers following the violation of guidelines set by the banking regulator. PPB failed to adhere Rs 100 crore net worth limit, violated KYC rule and did not follow the norms of not holding more than Rs 1 lakh in each account.

Almost after five months in January, RBI allowed PPB to add new customers.

As per last figure available, PPB claims to have over 42 million bank accounts and about Rs 25,000 crore being transacted on a monthly basis. It aims to achieve 100 million bank accounts by the end of 2019.

However, NPCI, in its report for the month of January had shown UPI transaction volume for Paytm at 221 million.

Paytm, in a response to the report, said that RBI data has not counted a large number of Paytm transactions where source account is another bank, where Paytm claims to drive mobile banking transactions of other banks.

Over 50% of our transaction in Feb 2019 fall under this category and the same number used to be close to 5% as most UPI transactions last year Feb, said Abhishek Ahuja, Senior Manager at Paytm Payments Bank.

Our market share has also grown to 30% if all UPI transactions happening on the Paytm app are accounted for in Paytm Payments Bank, he added.

Meanwhile, Entrackr has sought RBI's response in regard to mechanism in place for counting a transaction in mobile banking.

We will update the post once we receive a response from the central bank.

UPDATE: The post has been updated with Paytm response. RBI response in this regard is awaited.