The latest topic of interest in the banking circles has been that of payment banking. The Reserve Bank of India on Thursday released the draft guidelines for the licensing of both payments banks and small banks .
Amit Sheth, vice chairman, Aurionpro Solutions - a company that provides technology solutions to payment banks, says atleast 25-30 companies would be interested in providing the services to rural areas.
" We are currently in talks with a couple of players and we are exploring who would be interested in this business. Most non-banking financing companies and telcos are showing interest in it," he says.
Sheth further adds he expects to see a growth of 40 percent annual growth over the next three years.
Below is the verbatim transcript of Amit Sheth's interview with Anuj Singhal and Ekta Batra of CNBC-TV18.
Anuj: If you could explain how big is the opportunity and for your company in particular how big would this be?
A: We believe payment banks is an integral part of the Narendra Modi's government in order to get a larger section of the society into the banking network so that the delivery of the government programs and subsidies can go to the end user as well as channelise investments away from gold and cash which is predominantly what the rural India is investing into, into the mainstream economy. We are every excited by this opportunity and we are at the forefront of enabling the payment banks because we believe that if a payment bank has to be profitable, it has to be technology enabled.
Anuj: Have you done any kind of study in terms of what is the size of the market and how much it could add going forward to revenues?
A: I guess that will be for regulator to decide in terms of how many players would they want to be getting into this. However my personal take is that about 25-30 people would be interested in stetting up payment banks and that could cut cross NBFCs, telecos, retail chains, etc.
Ekta: What would be the backward integration as well as the forward integration that we could see for Aurionpro? What is your current suite of products and how would it integrate into a payment bank more effectively and what would it do to your margins if you do start operation?
A: We are technology provider to payment banks and payment banks would mean that the customer at the front end necessarily has to get a very differentiated customer experience and there will be a lot of automation that would be needed because payment banks would be setup in rural branches where the volumes would be low.
We have technology that enables that more in terms of customer on-boarding, automating that whole process of customer on-boarding, linking up with the KYC databases that are available like in UIDAI and then dispensing the cards, enabling transactions and then doing the customer service. So, it is an end-to-end front end suite of products that we have.
Ekta: Have you already started ground work, have you started exploring the market or do you know the market already considering that you supply so much technology to it?
A: We are in talks with couple of players in terms of what it is that we can go and add value to them. We are exploring who would be potentially interested in setting up these payment banks. So, we are in talks with some of these players as well, mostly from NBFCs and telcos.
Anuj: What is your overall outlook for your products business going forward because you have both products and services business?
A: Product business would definitely grow at a much faster pace than the services business.
Anuj: Any numbers that you can give us?
A: We are looking at about 40 percent CAGR on the products business over next three years.
aurionPro Sol stock price
On August 08, 2014, aurionPro Solutions closed at Rs 299.30, down Rs 5.55, or 1.82 percent. The 52-week high of the share was Rs 327.50 and the 52-week low was Rs 42.10.
The company's trailing 12-month (TTM) EPS was at Rs 14.88 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 20.11. The latest book value of the company is Rs 164.82 per share. At current value, the price-to-book value of the company is 1.82.
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