Blitz Bureau
NEW DELHI: Bharti Airtel will invest $2.2 billion (Rs 20,000 crore) in its financial arm over the next few years, India’s second-largest mobile carrier by number of users said on February 23, as it steps up its push into digital lending.
The capital will be infused into the subsidiary, Airtel Money, which received a non-banking financial company (NBFC) licence from the Reserve Bank of India (RBI) on February 13.
Airtel’s expansion comes as competition intensifies in India’s non-bank lending sector, where conglomerates such as Jio Financial Services and established players such as Bajaj Finance are scaling up retail credit operations.
The move strengthens Airtel’s financial services business as it diversifies beyond telecom into areas such as data centres, cloud and enterprise services.
The telecom major will contribute 70 per cent of the Rs 20,000 crore capital, with key shareholder Bharti Enterprises providing the remaining, Airtel said in a press release.
The move “will leverage the large Airtel customer base to build the next growth engine for the company and further diversify its portfolio,” it added.
A senior consultant said that Airtel is following the same model as Reliance and getting an NBFC licence shows its push to enter the lending market, something that it had so far been left out of.
Payments banks were conceptualised as a separate category in 2015 to reach the under-banked and unbanked masses, accepting deposits of up to ₹2 lakh per customer. But they cannot lend.
Amid tighter licensing
With RBI sticking to its stance against allowing corporates into banking, many groups have instead turned to NBFC licences over the years. Large business houses such as Larsen & Toubro and Godrej Group also operate non-banking financial arms, adds a report in Mint.
“The motivation for Airtel to move to an NBFC set-up could be a large upside in revenue from lending products such as working capital loans, credit cards, personal loans etc. A payment bank has constraints over such offerings,” said Abhay Johorey, Managing Director, Protiviti Member Firm for India, a consultancy.
According to Johorey, Airtel would need strong underwriting abilities with targeted lending and sound collection processes to succeed in the NBFC space.
Airtel’s expansion comes as competition intensifies in India’s non-bank lending sector, where conglomerates such as Jio Financial Services and established players such as Bajaj Finance are scaling up retail credit operations.
He said that the Rs 20,000-crore capital pool provides a solid base for a well-known brand like Bharti Airtel, allowing it to begin with small-ticket personal loans, refine its business model, and gradually build a diversified portfolio as it achieves key milestones.
Committed to inclusion
Meanwhile, Airtel said that its expansion in India’s fast-growing financial services sector underscores its commitment to deepening financial inclusion and empowering the underserved consumers.
Over the past two years, Bharti Airtel has built a strong credit engine and operated under a lending service provider (LSP) model, facilitating loans for partners without lending from its own books.
The lending service provider platform has already achieved adoption with over Rs 9,000 crore in disbursements, Airtel said.
“We have built one of India’s most trusted and scalable digital credit engines —reaching millions with high‑quality credit supported by industry‑best performance metrics,” Gopal Vittal, Executive Vice-Chairman of the company, said in the release. “Our NBFC expansion strengthens this foundation and reflects our ambition to build a differentiated, future‑ready digital lending business”.
As of December-end, Airtel had 466 million customers in India, including 368.5 million mobile users. In comparison, Jio had 515.3 million users in the country. Monthly average revenue per user (Arpu) for Airtel was at Rs 259 compared to Jio’s Rs 213.7.
In the quarter ended December, Jio Financial Services’ assets under management (AUM) under its NBFC was at Rs 19,049 crore, up 4.5 times year-on-year.
“Formal credit to GDP ratio in India is at 53 per cent, according to CareEdge Ratings, and highlights the scope for lending in the country,” Airtel said. “The expansion is also a natural adjacency that will leverage the large Airtel customer base to build the next growth engine for the company and further diversify its portfolio”.
