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A thread on this Yes Bank-Paytm/ Rana Kapoor potential deal.
1) For the bank (if Paytm is not just buying equity from RK), all is gets is capital. If anyone thinks getting a tech company on board is going to help bank’s revival plan, they are being hopeful at best. 1/6
1) For the bank (if Paytm is not just buying equity from RK), all is gets is capital. If anyone thinks getting a tech company on board is going to help bank’s revival plan, they are being hopeful at best. 1/6
2. The bank still needs to clean up, strengthen its liability franchise and improve profitability. This plan to use its UPI customer base to sell more loan products is ambitious as even admitted by HDFC Bank. 2/6
3. So for the bank, the relief is capital and only capital. If the deal is between Rana Kapoor and PayTM, then the bank doesn’t even get the capital. 3/6
4. For PayTM, they have been desperate to get into some kind of lending play. They are trying P2P, some education loan platform and now they want to access to a full service bank. Remember they already have the payment bank. 4/6
5. They are skirting on regulatory thin ice, trying to build a bank in parts without having a banking licence. Let’s see what the regulator has to say about that. 5/6
6. But what do to they gain from holding 10% in Yes Bank? Not clear to me. And no, regulations will not allow them to ramp up their stake. They will essentially be a financial investor and, at most, may have some tie-up on cross selling. Not a big deal really. 6/6
