Aditya Puri, the former Managing Director of HDFC, questioned fintech giant Paytm's business model, saying its banking services were based on cashback rather than services rendered or profit booked.
He said, "Paytm... he makes payments, when did he make a profit?"
Critical of the new wave of banks spun off by other businesses, Puri said companies like Amazon and Google Pay can't start banks of their own and will have to contend with the series of regulations commercial banks face.
According to Puri, a bank must have a brand, its own credibility, and must own the end customer, whereas payments companies only work on top of the groundwork laid down by banks.
Puri was speaking at an event organised by the IMC Chamber of Commerce at the University of Mumbai.
These criticisms come amidst a downturn in fortunes for the Vijay Shekhar Sharma-led fintech company. Paytm went public last year in the biggest IPO in Indian stock market history. However, over the months, it has seen its share value drop by over 75 percent.
In February, the Gurugram-headquartered fintech giant was hit by an order banning the registration of new users and the news that Founder Vijay Shekhar Sharma was arrested and released on bail for hitting another car with his vehicle.
Edited by Suman Singh