InvestorQ : Why is Flipkart investing huge amounts into banking business? Is that a good idea?
Aditi Sharma made post

Why is Flipkart investing huge amounts into banking business? Is that a good idea?

Answer
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Aashna Tripathi answered.
8 months ago


Let me clarify that Flipkart is not investing in the banking business but one of its founders Sachin Bansal is investing in his personal capacity. Now Bansal wants to invest the entire proceeds of $400 million that he got from the sale of his stake in Flipkart into the banking and financial services business where he sees a *** potential. Interestingly, Bansal will be roping in two very seasoned former bankers to driving his banking foray. One person is Nachiket Mor who was the Executive Director of ICICI Bank prior to joining the Bill and Melinda Gates Foundation. The other senior ex-banker is Paresh Sukthankar who is largely credited as the brain behind the phenomenal growth and conservatism of HDFC Bank. One thing is certain that he has surely brought in the best brains in the business to run the show.

Bansal received nearly $750 million post tax from his sale of stake in Flipkart to Wal-Mart in 2018. Of this he has already invested $300 million in ventures like Ola Cabs, electric bike maker, Ather, among others. The focus of Bansal will create a financial services offering that things and behaves like a consumer company rather than like a bank. According to Bansal, banking is all about financial problem solving and a consumer / FMCG approach is the answer. Bansal also believes in the geometric growth of the financial services business if India has to become a $5 trillion economy and if the credit / GDP ratio has to improve to the current level of 57% to the global benchmark of 100%. That surely is big potential!