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We will insist on KYC if we onboard Paytm customers, and this transition cannot happen by February 29: Axis Bank CEO

Axis Bank Managing Director and CEO Amitabh Chaudhary said on Tuesday (February 13) that regulatory approval from the Reserve Bank of India (RBI) was required for any potential takeover of Paytm Payments Bank (PPBL) merchants. Chaudhary highlighted this while sharing the current challenges of the banking sector in general and the Bank’s potential collaboration with Paytm.

However, the CEO of Axis Bank, during an interview with CNBC-TV18, clarified that there is no formal agreement in place with Paytm at the moment.

Taking an example to illustrate a hypothetical scenario, he discussed the process that would be involved if Paytm merchants were onboarded by Axis Bank, individual Know Your Customer (KYC) procedures would be a necessity.

Chaudhary acknowledged the time constraints associated with such an endeavor, mentioning that the KYC process cannot be completed by February 29.

Chaudhary stressed that Axis Bank would seek permission from the RBI.

Highlighting the need for a well-defined plan that aligns with the RBI’s vision, Chaudhary assured that Axis Bank would diligently adhere to regulatory guidelines and the bank would engage in a transparent and closely monitored process.

Chaudhary also drew attention to the potential market disruptions that could result from such a collaboration, recognizing Paytm’s significant presence as a FinTech giant with a large customer base.

Despite the potential challenges, he expressed Axis Bank’s willingness to support both its existing customer base and Paytm’s customer base during the transition.

While the CEO said discussions with Paytm were ongoing, he reiterated RBI’s central role in shaping the outcome of any collaboration.

The Axis Bank CEO’s comments come a day after he expressed the bank’s willingness to work with Paytm during the launch of Axis Bank’s ‘2023 Burgundy Private Hurun India 500’ report.

RBI Governor Shaktikanta Das had recently ruled out a review of the central bank’s actions against Paytm Payments Bank Ltd (PPBL).

During the interview with CNBC TV18, Chaudhary further shed light on the RBI’s pressure for banks to slow down and the need for convergence in credit and deposit growth.

He highlighted the challenges facing banks, including geopolitical factors, fiscal consolidation and monetary tightening.

Chaudhary stressed the importance of balancing credit and deposit growth, saying the current situation of high credit growth without adequate deposits is not sustainable.

Chaudhary highlighted the RBI’s message to banks to manage the credit-deposit (CD) ratio and increasing risk rates in certain asset classes.

He attributed the war for deposits to factors such as rising call rates, increasing bulk deposit rates and relentless pursuit of growth by banks.

Expressing his views on the future, Chaudhary predicted that credit and deposit growth would eventually converge. He believed that the RBI’s commitment to controlling inflation, coupled with tighter liquidity, would lead to a prolonged rise in interest rates.

As a result, he predicted that credit growth would likely slow or face rising interest rates in the future.

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William Dupuy

Independent political analyst working in this field for 14 years, I analyze political events from a different angle.
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