Bharti Airtel will consider listing its fintech unit Airtel Payments Bank (APB) as part of its strategy to monetise its digital service offerings, a company executive aware of the developments told FE. However, he added that the exact time had yet to be finalised.

While Airtel has several other digital businesses related to advertising, cyber security, cloud for SMEs and communications-platform-as-a-service (CpaaS), the executive said these businesses could not be monetised through payment banks as they are not related to mobile.

According to him, apart from payments, the only digital businesses that can be monetised are data centres, which will take years.

He said the contribution of digital business to Bharti Airtel’s total revenue is currently tiny at around Rs 3,000 crore per annum but overgrowing.

He said that with 50 million users and a gross merchandise value of Rs 20,000 crore, payments banking is a profitable business, so an IPO at some stage makes sense. In FY22, Airtel Payments Bank reported a profit of Rs 9 crore on revenue of Rs 941 crore. It posted a loss of Rs 464 crore in FY20 and Rs 434 crore in FY21.

Currently, Bharti Airtel holds a 70% stake in Airtel Payments Bank, with the remaining 30% owned by its parent company, Bharti Enterprises.

In 2016, Airtel Payments Bank was one of the first 11 operators and currently, the Reserve Bank of India has awarded only six operators a payments bank license.

Initially, Bharti and Kotak Mahindra Bank formed an 80:20 joint venture for the payments bank. However, Kotak Mahindra Bank sold its stake to Bharti Enterprises for about Rs 300 crore last year. Last year, Bharti also received approval from the Reserve Bank of India and the Foreign Investment Promotion Board to increase foreign direct investment in payments banking by up to 74%.

Industry insiders said that payment banking is a high-traffic, low-margin business, which is why some licensed players initially withdrew. Apart from Airtel, other players continuing to operate include Paytm Payments Bank, India Post Payments Bank, Fino Payments Bank, Jio Payments Bank and NSDL Payments Bank.

Among them, due to their telecom business, Airtel and Jio can leverage the network of retailers and neighbourhood stores. India Post’s payments bank enables post offices to offer payment banking services. At the same time, Fino has successfully expanded its network to use its outlets as digital banking hubs through a partnership with Bharat Petroleum.

Payments banks can provide the unbanked with small savings account facilities up to Rs 2 lakh, bill payments, Aadhar-enabled payment systems and remittance services. Mobile operators have an advantage in these areas because their subscriber base can easily take advantage of these services. These banks can accept deposits but cannot lend directly. Instead, they partner with non-bank financial companies, insurance companies, and mutual funds to cross-sell and up-sell various financial products.