After being chided by RBI brass for not investing early in the day, a top executive said on Thursday that they do not have money to burn for building such businesses.
The managing director and chief executive of the third largest private sector lender, Amitabh Chaudhry, was quick to respond to RBI Deputy Governor T Rabi Sankar's weekend statement, when asked to comment on RBI Deputy Governor T Rabi Sankar's statement.
Speaking at an event organised by Motilal Oswal, Chaudhry said businesses like Unified Payments Interface UPI are loss-making and also lack cash flows, and wondered how their valuations keep going up.
There are some other businesses that Google Pay and Walmart backed PhonePe are able to pump money into, because they have some other business to do. He said that the way ahead for such businesses is to either act as a distributor and collect fees, or compete with by getting into similar businesses.
Chaudhry said that such firms won't do that because the RBI has made it clear that they will regulate these players if they want to get into the lending game by becoming non-bank companies.
The problem with tech is that there are companies that are funded through capital who can make huge losses and get more value in the process. He said that institutions that have been around forever can't afford to play that game.
I think they have gained market share, but banks are slightly behind at the end of the day if they want to make money. Chaudhry summarised the cash flows that need to show up.
He has also expressed confidence about the retail asset quality holding well for the large lenders who have invested in technology, but warned that NBFCs and some state-owned lenders may be on a risky path.
He noted that there are only global factors that are worrying about the long period of a sustained high-credit growth cycle.
HDFC's Keki Mistry said the growth will only accelerate when the mortgage majors merge with HDFC Bank because of their distribution strengths.
He said only 2 per cent of the 7 crore HDFC Bank customers are HDFC customers, while only 2,000 of the 7,000 branches sell home loans at present.