In the next three years, HDFC Bank aims a ten-time increase in the number of small merchants it serves to 20 million sources at the largest private sector lender has announced.
Understanding Merchant Banks
Merchant banks are financial institutions and companies that deal with international finance for multinational corporations. These banks differ from other types of financial institutions. As such, they don’t deal with the general public. They don’t provide everyday financial services such as checking accounts, bill payments, or basic investments and don’t take deposits or make withdrawals for their customers.
Although they don’t deal with the general public, some of the biggest merchant banks also have retail and commercial banking operations.
Instead, merchant banks traditionally perform international financing and underwriting including real estate, trade finance, and foreign investment. They may be involved in issuing letters of credit (LOCs) and in the transfer of funds. They may also consult on trades and trading technology. Merchant banks use more creative forms of financing. They typically work with companies that may not be large enough to raise funds from the public through an initial public offering (IPO). Merchant banks help corporations issue securities through private placement, which require less regulatory disclosure and are sold to sophisticated investors.
Around 18 months ago, the bank began targeting merchants with results on accepting payments, delivering value-added services through a single app, like building a simple website for them, handling their inventory and giving loans depending upon their cash flows.
In interest income for the lending and also in low-cost current and saving account (Casa) deposits, the merchant relationships accrue in fees as the services are charged,
Currently, the bank is assisting two million merchants and the goal of the bank is to take it to 20 million in the next three years by the end of the financial year 2023.”
A higher number of merchants will contribute to the growth of the bank, the bank’s analytics engines gather more intelligence and deploy suitable solutions if the bank manages to have a huge number of merchants on-board.
Expanding the merchant acquisition business is a “strategic pillar” for the bank, therefore, currently, the focus of the bank would be more on building the foundation.
The bank is fusing payment solutions, that embrace associate degree acceptance infrastructure for purchasers to pay a businessperson and conjointly for the businessperson to pay a provider, with the fundamentals of banking like disposal associate degreed having an account at the rear finish.
Interest to serve the merchants has been growing since digitization started at the merchants’ end and the government has also been pushing banks to serve this community better and make them a part of formal financial channels.
It are often noted that interest regarding what happens within the merchants’ area has been terribly high particularly when the recent deals affected by the Mukesh Ambani-led Reliance Retail and
HDFC Bank processes 48% of the general spends through cards and a few fourth of the UPI spends happening at the businessperson ends, and also the businessperson uses
the app for a spread of uses together with shopping for, marketing and launching promotional campaigns likewise, the supply same.
“We have the whole recall and a physical network of branches that helps the U.S.A.
get to the merchants as per a neighborhood,” the supply the same.
When asked if it’s competitors with monetary technology companies, it had been processed that it’s additional regarding scheme play and also the bank is partnering with several of the UN
It is a period of victimization analytics however the bank has already given loans to five large integers of the merchants out of twenty large integer merchants it presently serves, the supply the same.