{"id":6013,"date":"2021-12-14T12:02:45","date_gmt":"2021-12-14T06:32:45","guid":{"rendered":"https:\/\/www.tickertape.in\/blog\/?p=6013"},"modified":"2021-12-14T12:02:45","modified_gmt":"2021-12-14T06:32:45","slug":"banking-revolution","status":"publish","type":"post","link":"https:\/\/www.tickertape.in\/blog\/banking-revolution\/","title":{"rendered":"India\u2019s Banking Revolution Without The Banks?"},"content":{"rendered":"\n

HDFC Bank<\/a> is the most trusted deposit-taking institution in the world, having a greater reputation among savers and investors. This abundance has made India\u2019s most valued lender so sluggish with frequent tech breakdowns, that it had been barred from issuing new credit<\/a> cards for eight months.\u00a0<\/p>\n\n\n\n

A regulatory check, however, is hardly a long-term answer. Bank licences provide people permission to create money out of thin air. The thought of sharing the privilege with a new generation of digital rivals will keep HDFC Bank and other conventional lenders on their toes more effectively.  <\/p>\n\n\n\n

On the basis of valuation, HDFC Bank\u2019s price-to-book multiple of four is significantly higher than larger lenders in China, the United States, Japan, Singapore, and Europe. On a per-share basis, certain Middle Eastern, Indonesian, and even a handful of Indian competitors like Kotak Mahindra Bank<\/a>, are more expensive but none can match HDFC\u2019s $ 189 bn. deposit base.\u00a0<\/p>\n\n\n\n

Nonetheless, such is the lethargy inherited by new CEO Sashidhar Jagdishan that he had to thank the regulator for the credit card ban and new digital efforts.<\/p>\n\n\n\n

The country\u2019s financial institution licensing policy has outlived its usefulness. There are innovative solutions available, but they must be regulated. <\/p>\n\n\n\n

The financial world is being reshaped by new technology. Indians now pay and receive Rs. 7.7 tn. ($ 102 bn.) every month via applications that run on a shared public utility. This is compared to nothing 5 yrs ago. Soon 440 mn. people using low-cost feature phones will be able to make cashless purchases.<\/p>\n\n\n\n

Merchants collect around 20% of all online payments made on the shared public network. They are avoiding expensive credit-card systems in favour of using their internet sales data as collateral for working capital loans. Fintech businesses pounced on the opportunity, with deposit-taking banks supplying the money in a passive manner. And this needs to change. <\/p>\n\n\n\n

Additionally, customers might revolt if banks continue to sit on their rights. The PhonePe app from Walmart Inc. transfers 47% of online money in India. Whereas, Paytm<\/a>, a local company, transfers only 10%. The savings market is still dominated by HDFC Bank and its larger state-owned rival State Bank of India<\/a>.\u00a0<\/p>\n\n\n\n

As a result, they\u2019re the top remitters in phone payments by default. Paytm<\/a> Payments Bank, on the other hand, is the market leader when it comes to receiving money. It\u2019s a small bank with a deposit limit per customer. Though it now has access to the central bank\u2019s emergency liquidity window, it is neither able to offer loans nor issue credit cards. <\/p>\n\n\n\n

A regulatory vacuum has resulted from a licensing framework that has slipped behind technological progress. A working committee of the Reserve Bank of India believes that there are 600 unlawful digital lending applications in India.\u00a0<\/p>\n\n\n\n

The outdated licensing framework in India needs to be brought up to date with the wider economy\u2019s digitisation developments. It will pave a path for traditional companies to shake off their lethargy and demonstrate to well-capitalised fintech firms a more definite road to profitability. Small enterprises may be able to obtain more affordable loans<\/a>, and savers will no longer be at the mercy of blackmailers posing as lending applications.<\/p>\n","protected":false},"excerpt":{"rendered":"

The idea of sharing the benefit with a new generation of digital rivals will keep HDFC Bank and other conventional lenders on their toes more effectively. Read India\u2019s banking revolution without the involvement of banks.<\/p>\n","protected":false},"author":45,"featured_media":6015,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[10,1744],"tags":[359,1046,823],"acf":[],"modified_by":"Manonmayi","jetpack_featured_media_url":"https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2021\/12\/05.png?wsr","_links":{"self":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/6013"}],"collection":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/users\/45"}],"replies":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/comments?post=6013"}],"version-history":[{"count":2,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/6013\/revisions"}],"predecessor-version":[{"id":6019,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/6013\/revisions\/6019"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media\/6015"}],"wp:attachment":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media?parent=6013"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/categories?post=6013"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/tags?post=6013"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}