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Following being chided by the Reserve Bank of India for allegedly missing the Unified Payments Interface (UPI) race by not investing early, Axis Bank's MD Amitabh Chaudhry said banks do not have money to burn for building such businesses, news agency PTI reported on 8 December.

Chaudhry, while speaking an event organised by brokerage Motilal Oswal, on being asked to comment on RBI Deputy Governor T Rabi Sankar's weekend statement, said, "We didn't have 3,000 crore of money to make a loss on."

He also opined that businesses like UPI are loss-making and also lack cash flows, and wondered how their valuations keep going up.

ALSO READ: Axis Bank to raise funds via Tier II bonds worth 12,000 cr

Adding more, he said that firms like Google Pay and the Walmart-backed PhonePe are pumping money into such products because they have some other business to do. The way ahead for such businesses is to either act as a distributor and collect fees, or compete with banks by getting into similar businesses.

Chaudhry even reminded about RBI's warning which said that it would regulate these players if they want to get into the lending game by becoming non-bank finance companies.

"Today, the problem with tech is that there are companies who are being funded through capital who can then spend the money to acquire the customers, make huge losses and get more value in the process. Banks or other institutions that have been around forever cannot afford to play that game," he said.

"My view is that at the end of the day, they (UPI apps) have gained market share, banks have been slightly behind, but if they want to make money... cash flows need to show up ultimately," Chaudhry summarised.

He also exuded confidence about the retail asset quality holding well for the large lenders in the system who have invested in technology, but warned that NBFCs and some state-run lenders may be on a risky path with this.

We are in a long period of a sustained high-credit growth cycle, and it is only global factors that are worrying, he noted.

With PTI inputs. 

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