Mint BFSI Summit | Payments banks are pioneering digital financial inclusion: Airtel Payments Bank’s Biswas

“Payments banks have created digital inclusion in a meaningful way. It has created funnels for small finance banks to become eligible for becoming larger banks and equally a path for many small institutions to become small finance banks,” he said during a fireside chat at the Mint BFSI Summit on Friday.

While payments banks face some investments in terms of accumulated losses over the years, the entire industry is profitable, Biswas said.

Capital requirement

The Indian economy will require $10 billion banking capital by 2030 to be able to achieve a gross domestic product (GDP) growth rate of 10%, according to Biswas. “This $10 billion cannot come unless you have more banks and credible and viable changes in the model that makes it exciting for fresh capital to come in.”

If payments banks are allowed to lend, it will drive financial viability as well as transform the country’s banking activities, the executive added.

“India has a labour workforce of 800 million whereas 350 million digital banking users are driving economic velocity in the country. Imagine if you were able to lend to an incremental 100-150 million consumers through payments banks. You will not only have driven economic momentum but driven formal inclusion at a significant scale compared to what is happening today,” Biswas noted.

Airtel Payments Bank, the country’s third-largest payments bank as per RBI’s estimates, today sees a third of all its new-account openings in deep rural areas being done by women.

“Women aged 30-40 years in tier-IV and tier-V regions now desire a bank account separate from their husband and family. This is a fundamentally different identity compared to the conventional perception,” he said.

Among urban consumers, there is a powerful subliminal need to separate their bank accounts—one with the bulk of their money, and another for digital payments to safeguard from digital frauds, he said.

“As the economic heft of the country and the per capita income increases, consumer needs are going to splinter and emerge in ways that are difficult to predict. This is why we need more banks and bank licenses to cater to the needs,” he said.