Small and payments banks have not yet devised a business model which can be termed viable, SBI Chairperson Arundhati Bhattacharya said on Monday. “Neither the payments banks nor small finance banks seem to have as yet devised a business model that can be said as viable,” said Bhattacharya, whose bank has tied up with Reliance Industries for a payments bank venture.
Addressing a banking seminar organised by industry lobby IMC here, she added, “...a mobile banking customer, who is also a customer for payment services, will be less free to migrate to a competition for mobile services. Hence, it is hard to see payment banks taking away customers or income from commercial banks in a big way. Similar arguments hold for small finance banks.”
Admitting that the entry of other non-banking companies, through their investments in small finance and payments banks, has changed the dynamics of competition in the sector, she said, “There are some legitimate concerns whether banks, particularly public sector banks, will survive this onslaught.”
This is the third time the SBI chief has cast doubts over the payments banks model. Once, she went to the extent of saying that with deep-pocket corporates entering payments banking, it would be a “dog eat dog” scenario in the sector. Ms. Bhattacharya’s comments come within a fortnight of RBI saying it will allow differentiated lenders like custodian and wholesale banks. — PTI
Entry of other non-banking companies has changed the dynamics of competition
