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‘We are still open to payments banks partnerships’
IDFC Bank grabbed attention on Monday when it announced the acquisition of microfinance firm Grama Vidiyal. In May, it had similarly surprised everybody, including
IDFC Bank grabbed attention on Monday when it announced the acquisition of microfinance firm Grama Vidiyal. In May, it had similarly surprised everybody, including the Reserve Bank of India, when it opted out of payments bank. MD and CEO Rajiv Lall clears the air in an interview with HT. Excerpts:
What was the reason for opting out of payments bank?
You see, Telenor, one of the significant partners is re-evaluating its strategy in India. Likewise, (our other partner) Dilip Shanghvi was also reviewing the competitive landscape that a payments bank would unveil in India, revisiting his earlier plan for such a bank. I would say a combination of these reasons led us to not pursue.
Given that backdrop, are you open to more partnerships?
We are open to any kind of partnerships including for a payments bank. For a new bank, it is all about partnering in intelligent ways with business leaders, such as Grama Vidiyal’s Devaraj (founder S Devaraj), or with banking correspondents, startups or fintech companies.
What was the reason for the acquisition of Grama Vidiyal?
The customer segment for MFIs is growing very rapidly, the complexity is very low and it’s a very clean book. The people, management, their vision and alignment with the vision is good. So also is the quality of the customer and assets base.
What is the status on IDFC’s holding structure? Has IDFC Bank approached RBI to dissolve the structure?
We are exploring that option. The latest banking guidelines say the non-operative finance holding company is not required. We want clarity that the same set of rules are applicable to all banks, including the new lot. The problem is that you have a listed parent company, which owns the bank that is also listed, and in between there is another holding company that the RBI wants. So each time a dividend is given, you lose in taxation and value by the time you get to the holding company.
What do you expect from the new governor of RBI?
(Whoever comes in) will have to deal with the asset quality problem. They have to make sure that the arrangement of MPC (monetary policy committee) framework is operationalised. The biggest challenge, which IDFC is trying to address, is how do you nurture and motivate the formal banking system to serve a much deeper and wider base of customers amid technology and competition.
