RBI’s tokenisation play for CBDCs; Flipkart chief on profitability

Happy Republic Day! To widen the use cases of central bank-backed digital currency, the RBI is exploring tokenisation of government bonds and securities. This and more in today’s ETtech Morning Dispatch.

Also in this letter:
■ Swiggy axes more jobs
■ Byju’s dragged to NCLT, again
■ Ola Cabs CEO on future plans

E-rupee push: RBI looks to tokenise G-secs, customer deposits

The RBI is exploring new use cases to be built on top of CBDC, or central bank-backed digital currency, and early conversations around asset tokenisation have already taken place.

What’s the news? The RBI is exploring if government bonds and securities can be tokenised, and whether retail consumers can use the digital currency they hold in their wallets to invest in those securities. Early talks around tokenising fixed deposits held by customers in banks are also underway. This will help create an entire ecosystem around CBDC.

Also read | RBI seeks ways to make digital currency payments easy as cash

Early stages: These conversations are still in the early stages, bankers in the know said. Currently, banks have the primary target of increasing the adoption of retail CBDC wallets. With these new use cases being planned, the expectation is that more customers will start parking a part of their savings in CBDC wallets.

Also read | Central Bank digital currencies to replace cash in the coming decade: report

Current usage: Adoption of CBDC in the retail phase has been limited owing to the common use case of consumer payments. Since the Unified Payments Interface (UPI) works instantly, Indian consumers are not compelled by the use cases of retail CBDC yet. RBI data shows that in 2022-23, the total value of CBDC stood at Rs 16.4 crore only, with Rs 5.7 crore being in retail assets and remaining in wholesale assets.

International adoption: Early pilots have been conducted in Hong Kong by global card major Visa in partnership with HSBC and Hang Seng Bank. Two use cases were tried: settlements made by banks to merchants and property payments. American lender JP Morgan noted in a report recently that applying blockchain technology in deposits can help make settlements instantaneous and transparent.

Flipkart close to profitability: CEO tells staffers in townhall

Flipkart group’s chief executive Kalyan Krishnamurthy told his employees in a town hall that the ecommerce major is close to hitting profitability as it has significantly reduced its monthly cash burn, sources told ET. This was the first time Krishnamurthy spoke publicly to employees about profitability.

Profitability is key: The CEO discussed the profitability plans but did not give a specific timeline. “Krishnamurthy has discussed with senior leaders that profitability is likely this year but there was no timeline given. Even with the new fundraise in progress, he has mandated lower cash burn across businesses,” one of the persons present in the town hall said.

UPI on the anvil: Flipkart is testing its own offering on UPI with a closed user group. The move will pave the way for it to enter the payments business after its separation from PhonePe. While Krishnamurthy did not say when the service will go live, sources said it is likely by early February. ET first reported about this on May 16 last year.

Flipkart is venturing into the fintech space through Super.money, a platform set up by senior executive Prakash Sikaria, where the etailer holds a majority stake and has invested $15-20 million.

Cost-cutting measures: ET reported on January 8 that Flipkart is trimming its team size by 7%– around 1,500 jobs. The restructuring process is now underway and is expected to conclude by March-April.

Cleartrip in focus: The Flipkart group chief confirmed the fast-paced growth in its travel business Cleartrip, saying it has become the second largest player in the market. ET had reported citing sources that Cleartrip gross sales have jumped to $1.5-1.7 billion.

Also read | Flipkart-owned Cleartrip’s loss nearly doubles in FY23; income falls 17%

IPO-bound Swiggy to slash 400 jobs in latest round

IPO-bound Swiggy is set to trim its workforce by 350-400 jobs, sources have told ET. The firm, which competes in a food-delivery duopoly with listed rival Zomato and is also present in the quick-commerce segment with Instamart, is implementing the cuts to further rein in costs, people in the know told us.

Where and how: The cuts, impacting about 6% of its 5,500 to 6,000 staff, will most likely happen across teams like technology, customer support, and corporate roles. As per briefs given to senior leaders in the firm, the layoffs are expected to kick in over the next few weeks.

Why now: While Zomato has turned in a profit at the company level for two quarters already, Swiggy saw its loss narrow 35% to $208 million for the six months ended September 30, 2023. A lot of this is driven by expenses related to Instamart, as the core food business had declared profitability in March last year. Swiggy has around $800-900 million left in the bank, sources said.

Challenging times: Swiggy now joins a club of major new-age firms like Flipkart and Paytm to resort to layoffs in recent times. We exclusively reported on December 25 and January 8 that Paytm and Flipkart were cutting 1,000 and 1,100-1,500 roles respectively, as leading Indian startups strive to clamp down on costs.

US lenders drag Byju’s to bankruptcy court in India

byju raveendran crisis tHUMB IMAGE ETTECH

Stressed edtech firm Byju’s is in fresh legal trouble. A group of US lenders has petitioned the bankruptcy court in India to initiate insolvency proceedings against the firm, adding to its long list of problems. Byju’s has, however, said the lenders’ move was premature and the allegations were baseless.

Driving the news: The lender group filed the insolvency application against Byju’s parent Think & Learn before the Bengaluru bench of the National Company Law Tribunal (NCLT) earlier this week. They claimed the company had defaulted on loan payments.

The lenders have been in negotiations with the company over the prepayment of a $1.2 billion term loan taken by its US subsidiary, Byju’s Alpha.

Also read | Byju’s FY22 losses soar to Rs 8,245 crore; cash-strapped edtech explores rights issue at $500 million valuation

Verbatim: “This action was taken following over 16 months of good faith efforts on behalf of the ad hoc group to restructure the term loans, which, if successful, would have immediately solved for the loan’s numerous outstanding defaults, acceleration, and ended all open litigation while avoiding further enforcement actions,” the lender group said in a release on Thursday.

Also read | BlackRock slashes Byju’s valuation by 95% to $1 billion

What’s the issue? The loan that Byju’s had initially agreed to pay via quarterly installments of $30 million, starting June 2022, has been a longstanding issue for the firm. The company halted payments in July 2023 and is currently engaged in a legal wrangle with creditors in the US.

Also read | Ranjan Pai turns white knight for Byju’s with 40% stake in Aakash

Ola Cabs turns Ebitda profitable; new CEO says electric fleet key

Ola Cabs’ new chief executive Hemant Bakshi said the electrification of its fleet and premiumisation will drive growth for the firm while announcing that the ride-hailing business was profitable on an Ebitda level.

All about numbers: The standalone ride-hailing business earned Rs 250 crore in Ebitda terms in FY23, Bakshi said, against an Ebitda-level loss of Rs 66 crore the previous year. ET had reported on January 10 that the ride-hailing business’ overall loss stood at Rs 1,082 crore in FY23, narrowing by 65% from a year earlier.

Future bets: Bakshi said the firm would rely on premium offerings like Ola’s Prime+ as well as electrification of the fleet to drive growth. Ola Prime+ currently has over 20,000 drivers in seven cities. Electrification would drive down the cost of the ride-hailing business in the future, driving deeper penetration, he claimed.

A close relationship: Bakshi confirmed that the firm had bought about 8,000 electric scooters from public markets-bound Ola Electric. “The inter-party arrangement is that Ola Electric makes the vehicle and sells to Ola Cabs or the driver at an arm’s length, largely to the drivers, and Ola Cabs is responsible for building the network,” cofounder and managing director Bhavish Aggarwal said about the relationship between the two firms.