JPMorgan is positive on public sector undertaking (PSU) banks, Saurabh Kumar, India banking and financial research, told CNBC-TV18.
“We are positive on PSU banks, on the thesis that the large corporate asset quality in India has probably bottomed out. We have, through the last two years, not seen any major loan default and the books are basically provisions for these banks,” Kumar said.
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On private banks, he said, “The net slippage numbers should be better-off and we think from an asset quality perspective, that should really help.”
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According to Kumar, the payments market in India is in the client acquisition phase. “At this point of time, the payments market in India, it’s largely a loss leader structure, there is not much revenue pool in payments, it's generally a way to acquire customers and then the monetization eventually happens on doing more conventional lending or third-party product distribution. Eventually, as they look to monetize, they will move into lending and the distribution piece over time. Initially, this will be in a cooperative model with banks, where they will tie up with banks and maybe try to lend to the unbanked customers, but over time, there will be some level of disintermediation risk, especially on the fee part, which would start playing out,” he said.
For the entire interview, watch the video