HDFC Bank will launch co-branded credit cards along with Paytm. This marks the first aggressive alliance struck by the lender after Reserve Bank of India lifted the ban imposed last year on the bank barring it from issuing credit cards because of recurring glitches to its backend platform.
HDFC Bank lost market share to peers ICICI Bank and SBI due to the ban and is now looking to claw back the 200 basis point lost market share in the crowded and competitive credit card business in the country. HDFC Bank’s market share fell to 23.6 per cent In June 2021 from 25.6 per cent in November 2020 but the bank retained its lead with a base of 1.48 crore credit cards.
The credit card, powered by Visa, is planned for launch in October 2021 to coincide with the festive season. EMIs and buy now pay later option with the full suite of products will be offered by the end of December.
Under the partnership HDFC Bank and Paytm will also introduce business credit cards for merchants from smaller cities and towns and enable them with access to credit with instant and paperless approvals. Paytm has a base of 330 million consumers and 21 million merchants as of March 31, 2021.
“As a leader in the cards space, our objective is to help enlarge the ecosystem through such collaborations, which ultimately offers a differentiated experience for customers,” said Parag Rao, group head - payments, consumer finance, digital banking and IT, HDFC Bank.
Kotak stake in fintech firm
Kotak Mahindra Bank is investing Rs 310 crore to pick up a 9.98 per cent stake in registrar and transfer agency KFin Technologies which provides services to mutual funds, alternative investor funds, wealth managers and companies.
The General Atlantic-backed firm, which posted a turnover of Rs 481 crore in 2020-21, also provides financial technology solutions across other asset classes such as insurance and pension. It serves 25 mutual funds and has a 35 per cent share in equity assets under management.
KFin also provides back-office operations and data processing services, besides being a central record-keeping agency under the National Pension System.
In a regulatory filing with the stock exchanges on Monday, Kotak Mahindra Bank said that the all-cash deal is a financial investment and will be completed by the end of October 2021.
Kotak Mahindra Bank’s joint managing director Dipak Gupta said the investment was in line with the private sector lender’s stated strategy of making minority investments in businesses which are professionally managed and have deep client entrenchment.
“As a platform of choice for asset managers, investors and corporates, we believe KFin is well-positioned to continue growing its market position,” Gupta said, adding that the bet will create long-term value for its stakeholders.
“With Kotak Mahindra Bank’'s support, along with the continued support of General Atlantic, an existing shareholder of KFin, we shall be able to achieve greater heights in our technology, business processes, leadership depth and governance,” KFin chairman M.V. Nair said while commenting on the development.
Shares of Kotak Mahindra Bank on Monday ended marginally lower at Rs 2,001.25 on the BSE.
According to Kfin’s chief executive Sreekanth Nadella, the lender’s vision to deliver outstanding value in a simple and straightforward manner complements Kfin’s commitment to provide unparalleled client outcomes on demand.
“We believe this investment shall serve as a strong foundation for KFin to build next generation techfin solutions for financial infrastructure institutions,” he added.
The Kotak Mahindra group was recently in the news when it acquired the vehicle financing portfolio of Volkswagen Finance, the domestic captive financing arm of Volkswagen Group. With the acquisition, Kotak will gain access to over 30,000 customers with a total loan outstanding of around Rs 1,340 crore which are classified as standard under Reserve Bank of India (RBI) norms.
