Page 8 - Banking Finance December 2019

BANK UPDATE

Bank of India fines FIS In- Paytm payments bank wishes to turn into small fin
dia flouts ATM for flout- model
ing service Paytm is willing to convert its payments bank into a small finance bank as that
will allow it to lend to its consumers and build a
FIS India, a subsidiary of Florida- more profitable growth model, the firm’s
headquar- founder and CEO Vijay Shekhar Sharma has said.
tered FIS This comes on the back of India Post Payments
Global, has Bank waiting for the RBI approval to convert it-
been fined Rs self into a small finance bank, after finding the
12 crore by payments bank model unviable.
Bank of India
for allegedly flouting service condi- Sharma said the payments bank will approach the government and the banking
regulator for a small finance bank licence as it can leverage the model using
tions around managing ATMs, three
technology enabled low-cost operations — a central theme of small finance
sources in the know of the matter.
banks, according to the RBI.
The bank is also not expected to re-
new its contracts with FIS for the “We are keen to be a small finance bank. If the regulator gives the nod, we will
next 10 years, the sources added, po- definitely want to pursue this,” he said. After the regulator had notified a dis-
tentially causing a massive business cussion paper on small finance banks for public comments earlier in the year,
loss for the financial services Paytm submitted its feedback to the central bank highlighting such a need. The
company. RBI has said it can allow payments bank to be small finance banks if the model
meets its guidelines.
“The bank has penalised FIS
India...because of flouting of service The development follows a $1-billion fund-raise by Paytm in fresh round with
conditions regarding minimum plans for a major play in lending and financial services. Paytm’s parent One97
wages to be paid to caretakers and Communications is also looking to cut operational losses by a third to at least
security guards for managing a cer- $350-400 million (Rs 2,492-2,848 crore) this financial year as investor sentiments
tain chunk of its ATMs,” said source. turn cautious globally. Sharma owns 51% of the payments bank and the rest is
FIS also offers managed services for held by One97.
ATMs, among a wide range of other
services to banks. Under this vertical, Imphal bank employees to stage protest in front of
banks outsource the entire manage-
ment of the teller machine and the Parliament
site to FIS and pay for the services. The employees of various public sector banks (PSB) in Imphal are all set to stage
protest under the banner of the All India Bank Employees Association (AIBEA) in
“FIS is fully committed to conducting front of the Parliament, as a protest against bank against mergers of banks and
its business ethically and in compli- privatisation, on 10 December.
ance with all applicable laws... FIS
management outside of India imme- The union government has resorted to consolidation in public sector banks by
diately launched an investigation merging them which would result into closure of 6 banks, having over 5,000 bank
upon learning of compliance issues branches, which would eventually lead to huge unemployment.
involving its ATM managed services Neither the shareholders, nor shareholders nor employees of the bank de-
business in India and have hired out- manded the merger. This space is being made available to payment banks, small
side counsel to assist in the investi- finance banks and universal banks from private sector. Thus Corporate who to-
gation,” a source has further. day are bank defaulters, are day dreaming to be the owners of those banks.
“The company has taken steps to as- The unions including AIBEA AIBOA BEFI INBOC, AIBOC and INBEF, representing
sure compliance going forward and 80 per cent of the banking industry including employees and officers, have
put additional controls in place to organised the dharna, Devidas Tuljapurkar, General Secretary of the
prevent similar issues in the future,” Maharashtra State Bank Employees Federation, affiliated to All India Bank
the spokesperson added.
Employees Association told this correspondent.

8 | 2019 | DECEMBER | BANKING FINANCE