Demonetisation has turned out to be positive for financial inclusion, according to Axis Bank MD & CEO,Shikha Sharma . In a conversation, she elaborated on the advantage of the initiative to further the government’s stated objectives of taking the economy to a ‘cashless or less cash’ state.
On demonetisation, some say it is positive, while others say it has negatively impacted the common man, as the banking sector has not been able to fulfil their basic banking requirement of cash. Your view?
Considering the massive scale of the entire exercise, the banking sector as a whole has shown remarkable resolve and exceptional service standards. The task of replacing more than 22 billion pieces of Rs.500 and Rs.1000 notes for 1.3 billion citizens through 1.3 lakh branch outlets is huge. Historically, nowhere in the world has a similar exercise been undertaken at this massive scale.
It is a matter of great pride and satisfaction the way our fellow colleagues at branches are handling the entire situation. They are the real heroes in these trying times and we cannot thank them enough for their phenomenal efforts, which is well beyond the call of duty.
Axis Bank has led from the front in successfully reaching out to the customers in their banking transactions, be it waiver of charges or extended business hours into late evenings or to go out of their way in supporting senior citizens and women customers as well as non-customers. I have been inundated with compliments and praise for our employees from customers as well as other stakeholders.
Have you opened any new accounts including jan dhan accounts? How many such people who do not have bank accounts have approached the bank for an account?
Demonetisation has turned out to be very positive for financial inclusion. We have been servicing and helping a lot of customers to open accounts, and a considerable number of these new accounts opened are for the customers who do not have existing bank accounts, and now have got included in the formal banking systems. This will definitely increase the bank account penetration in the country.
Axis Bank has been pushing the cause of digitisation and alternate platforms, such as cards and mobile technology. How are these alternate channels panning out in these trying times?
Over the years, we have made considerable investments on digitisation of our banking services. These are the times when you feel good about digital investments, as it’s time to reap benefits from them. All our alternate platforms – cards, internet banking, mobile banking, PoS terminals - have further gained momentum post the demonetisation announcement.
To give you some perspective, our average daily debit card transactions has almost doubled. Daily debit card spends have also increased by more than 75 per cent. We are already the third largest Merchant Acquirer in the country with more than 2.7 lakh PoS terminals installed. Demand for PoS machine installations has increased 2-3 times post demonetisation. We have seen digital transactions; mobile transactions go up as well.
How is Axis Bank using demonetisation to further its objectives of taking the economy to a ‘cashless or less cash’ state?
We are focusing on card issuance, PoS terminal installations, Mobile / Internet banking and UPI for promoting a ‘less cash’ society. We are already the fourth-largest credit card issuer in the country. Our year-on-year growth in credit card spends for the first half of FY17 is the highest amongst major credit card issuers.We continue to invest in our merchant acquiring business. We have already installed more than 50,000 PoS terminals in first the six months of FY17 and now plan to deploy even more in the second half of FY17.
We had launched mVisa a couple of months ago and we have worked with taxi drivers, small shops, vegetable vendors and to see if they can they adopt mVisa. We are now beginning to work with them on UPI (Unified Payment Interface) as well and see how we could make them familiar with UPI. The biggest draw for UPI is its power to make payments seamless and instantaneous by requiring the payee to only remember a virtual payment address, much like sending an email.
UPI is a game changer in that it is a unique interface which works 24x7 across the banking system and is instant, safe, secure, cost effective and convenient to use. UPI allows a payment directly from your bank account - so no need to pre-load your money onto wallets which does not pay interest on balances. UPI allows payments to different merchants without the hassle of typing one’s card details, or net-banking password. UPI is built on top of the IMPS, which we have used to instantly transfer money between accounts with different banks. Axis Pay, our UPI App has seen 9 times more daily downloads post demonetisation. So, depending upon the merchant type, depending upon the volume of transactions of these merchants, we are offering differentiated solutions to help them go cashless.
Is it good strategy to introduce Rs.2000 notes when the need for smaller denominations is higher? Have you made any representation to the RBI or the government?
The issue is not about Rs.2000 notes; there is a requirement for all types of notes. RBI has started supplying Rs.500 in the last few days and it will push out a lot more of that denomination in the coming days. We understand that the print runs will be largely in denominations of Rs.500. The ATM recalibration is also proceeding quite well. We just have to make sure that sufficient cash flows through these ATMs.
Some more new banks, especially small finance banks, are said to become operational. Would they impact your CASA growth, as also microlending?
The microlending program of our bank is driven by three cornerstones - technology, big data analytics and a lower cost of capital. We do not believe that the emergence of the small finance banks would reduce the competitive advantage that we enjoy in each of these three areas. Also, it is important to note that this segment of customers has been under-banked for a long time.
The opportunity, therefore, that exists is very large. All banks can coexist in this large market place.
