Veteran banker Aditya Puri on Tuesday raised questions about Paytm’s business model, saying the recently listed financial services company has earned customers not by rendering services but by way of cashbacks. Puri, who led HDFC Bank from inception and made it into the largest in the private sector space by the time he retired in 2020, further questioned Paytm’s model, wondering where are the profits if the company manages so much of payments.

The remarks come amid a steep decline in Paytm’s shares, which are now trading 75 per cent lower than the price at which investors bought them at the initial public offering. This is not the first time that Puri has gone public with his concerns on the models of such companies.

“Paytm… he makes payments, when did he make profit,” Puri asked, speaking at an event organised by the IMC Chamber of Commerce at the University of Mumbai.

Puri said unlike a bank, which books revenues for offering its services and reports profit, Paytm has garnered its millions of customers by offering cashbacks.

Stressing on the hardwork involved in aspects like cross-selling, Puri said years of work had to go in before HDFC Bank could increase its cross-selling capabilities in the auto loans segment despite owning the customers by virtue of offering them other services.

Puri, who faced some questions on the practices followed by auto loans vertical of HDFC Bank towards the end of his tenure, said corporate governance in the entire country is a problem and we have put a “halo” around it.

He said corporate governance is a cultural aspect, which has to be set from the top in an organisation and added that the RBI is taking good efforts at improving the same at lenders.

Puri said service providers like Amazon and Google Pay cannot start a bank of their own and if they do, then they will have to be contend with the slew of regulations that commercial banks have to follow.

A bank has a brand, credibility and owns a customer whereas a payments company only rides on the groundwork done by the bank, he said, stressing that the lender needs to be paid for making such service-delievry possible.

Puri said semi-urban and rural markets have all the necessary aspects for economic progress but lack support from financial institutions who are unwilling to cater to the needs.

Stating that bankers are afraid about loan repayments in such areas, Puri suggested a government guarantee set-up to take care of the concerns and also make banking services delivery better.