Payment banks, including Paytm, Jio, Airtel, Fino saw their aggregate losses reach Rs 6.26 billion in March 2019, and increase from Rs 5.15 billion reported in March 2018.

As per the Reserve Bank of India (RBI), the limited operational space available to these players and the large initial costs involved in setting up of the infrastructure imply that it may take time for payment banks to break even as they expand their customer base.

Interest income of the payment banks increased by 45 per cent year on year to Rs 2.55 billion during March 2019. Other income (including commission on transactions) doubled to Rs 20.93 billion during the period under consideration. Meanwhile, remittances through payment banks increased 23 per cent to Rs 1.10 trillion from Rs 896.53 billion an year ago.

That said, operating expenses rose sharply by 74 per cent year-on-year to Rs 29.25 billion. The return on equity for payment banks worsened in the negative from 27.9 per cent to 34 per cent during the same period. As per RBI, despite improvement in net interest income and non-interest income, increases in operating expenses resulted in overall negative profits for payment banks in 2018-19.

Currently, there are seven payment banks currently operational in India.

As per RBI, UPI took over from e-wallets as the most prominent channel for inward and outward remittances in terms of both value and volume for payment banks. UPI transactions increased to 499 million worth Rs 572.19 billion – accounting for 70 per cent of total transactions. E-wallets had only 18.6 per cent of the total transaction pie, which includes transactions via NEFT, IMPS, other modes.

Payment banks saw their deposit base double this year to Rs 8.83 billion from Rs 4.38 billion a year ago. These banks are not allowed to collect more than Rs 100,000 as deposit from customers.