Paytm has got customers through cashback, not by rendering services: Aditya Puri

Puri, who led HDFC Bank from the beginning and made it the largest in the private sector until retiring in 2020, questioned Paytm’s model, wondering where the profits lie if the company manages so many payments.

The comment came amid a sharp drop in Paytmshares, which are now trading at 75 percent below the price at which investors bought them in the initial public offering. This is not the first time that Puri has gone public with his concerns over the model of such companies.

Speaking at an event organized by the IMC Chamber of Commerce at Mumbai University, Puri asked, “Paytm…he pays, when did he make profit.”

Puri said that unlike a bank, which books revenue and reports profit for offering its services, Paytm Has attracted millions of its customers by offering cashback.

Emphasizing on the hard work involved in aspects like cross-selling, Puri said HDFC Bank had to work for years before expanding its cross-selling capabilities in the auto loan segment despite owning customers by virtue of offering other services. Had to do.

Puri, who faced some questions on the practices followed by HDFC Bank’s auto loan vertical towards the end of his tenure, said corporate governance is a problem across the country and we have put a “halo” around it.

He said that corporate governance is a cultural aspect, which has to be instilled in an organization from above and added that RBI is making good efforts to improve it among the lenders.

Puri said service providers like Amazon and Google Pay cannot start their own banks and if they do, they will have to follow a number of rules that commercial banks have to follow.

A bank has a brand, credibility and owns a customer, whereas a payments company only rides on the groundwork done by the bank, he asserted, to make such service-delivery possible for the lender. is required to pay.

Puri said that the semi-urban and rural markets have all the necessary aspects for economic progress, but there is a lack of support from financial institutions which are not ready to meet the needs.

Stating that bankers fear loan repayments in such areas, Puri suggested a government guarantee set-up to take care of the concerns and improve the delivery of banking services.

This story has been published without modification in text from a wire agency feed.