Axis bank
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This article is written by Swetha Sethuraman, pursuing a Diploma in M&A, Institutional Finance and Investment Laws (PE and VC transactions) from Lawsikho.


The advent of technology has promoted the playing field for digital payment apps to flourish in India. In 2010, the Freecharge co-founders Sandeep Tandon and Kunal Shah decided to team up and explored the option of stepping into the business of developing an application that provided a cashback and promotional discounts for organized retailers called ‘Paisaback’. However, they discovered that a mobile phone store earns nearly all of its revenue from prepaid mobile recharging and this led to the duo launching the ‘Freecharge’ site on August 15, 2010.[1] 

The duo had launched the site which would only allow its users to recharge their prepaid phones but with the increasing demand, they began expanding its services to include various bill payment options like post-paid mobile, DTH, electricity, landline and gas bill. In 2012, the site was expanded by partnering with large chains like McDonald’s, Dominos and several other e-commerce platforms. The site had begun providing discount coupons that were equivalent to the customer’s recharge value, these coupons could be used at any of the popular food and retail outlets.

Freecharge had begun by setting its base headquarters in Mumbai. However, with increasing customer base, they decided to expand out of Mumbai by setting up offices in Bengaluru and Gurugram after they had received the required funding to do so. In November 2012, Freecharge launched its Android app by receiving funding from ‘’, an angel funding platform[2].

The mobile-commerce application began gaining popularity which led to the start-up being approached by the online e-commerce platform Snapdeal with the proposition to acquire. In April 2015, Snapdeal acquired Freecharge for $400 to $450 million[3] which was touted as one of the biggest Merger and Acquisition deals in the e-commerce industry in India. 

In 2016, Freecharge decided to partner with Axis Bank by launching a Unified Payment Interface (UPI) that would facilitate bank transactions using a virtual payment address. In 2017, Jasper Infotech, parent company of Snapdeal was seen investing into Freecharge, as the company was struggling for funds. The parent company of Freecharge, i.e., Snapdeal continued to struggle for cash with talks being held for acquisition by rival Flipkart[4]. The acquisition deal of Freecharge provided an opportunity for Snapdeal, a cash-strapped e-commerce platform, to continue its day-to-day operations until the acquisition deal with Flipkart was finalized. This led to talks being held for acquisition of Freecharge by Axis Bank. Finally, on July 27th 2017, Freecharge was acquired by Axis Bank, a private sector lender for Rs. 385 crores ($60 million)[5].

The deal

The two subsidiaries of Jasper Infotech Private Limited i.e., Accelyst Solutions Private Limited incorporated on 29th July 2008 was primarily engaged in the business of providing and facilitating online recharge/bill payment/coupon service, marketing platform for third parties, distribution of mutual funds and insurance products through its mobile application/website/mobile site. Freecharge incorporated on 14th January 2015 was primarily engaged in the business of operating payment systems for semi-closed prepaid payment instruments and gift vouchers under the license issued by the Reserve Bank of India (“RBI”), card processing services, payment aggregation services, merchant acquisition services and payment support services. These together, i.e., Accelyst and Freecharge form a digital payment business.

Snapdeal, the parent company of Freecharge had many failed attempts to monetise its investment in Freecharge. As efforts to raise funds failed, Freecharge was put up for sale. In December 2016, various players in the field had been vying to acquire the company, including Paytm, Mobikwik, Amazon, PayPal, Airtel Money and Naspers[6].

However, in 2017, Axis Bank is the third largest private sector bank in India. The bank offers the services to customer segments covering large and mid-corporates, SME, agriculture and retail business[7]. Axis Bank acquired an 100% shareholding of Freecharge for Rs. 385 crores outside its main line of business with an expectation to help the bank take a leap towards digital distribution of financial products to provide its customers in a more efficient manner.

Procedure and regulatory requirements

The approval of the Board of Directors of Axis Bank would be accorded before the formal closing of the deal. Pursuant to the approval of the board, the bank entered into a Share Purchase Agreement (“SPA”) with Jasper Infotech Private Limited (“Snapdeal”), to acquire 100% equity capital of Accelyst Solutions Private Limited (“Accelyst”) and Freecharge Payment Technologies Private Limited (“FPTPL”) (Accelyst and FPTPL collectively referred to as “Freecharge”), subject to receipt of the regulatory approvals, including from the RBI, for a cash consideration for Rs. 385 crores[8].

Axis Bank being a listed company is required to make a disclosure in terms of Regulation 30 of the SEBI (Listing obligations and disclosure requirements) Regulations, 2015 read with SEBI Circular date 9th September 2015 for providing the details of the acquisition to the stock exchange all events or information, which are material, as soon as reasonably possible and not later than twenty four hours from the occurrence of the event or information[9].  The bank was seen complying with the disclosure requirement through its public letter dated 27th July 2017 immediately after completion of signing the SPA dated 26th July 2017.

The bank being a listed entity also requires to comply with the following governmental or regulatory approval for the acquisition:

  • Approval of the RBI for acquisition of Freecharge under the Banking Regulation Act, 1949 and RBI (Financial Services provided by Banks) Directions, 2016.

The Banking Regulation Act, 1949 was enforced with the purpose of promoting the idea of banking in India. The main objective while enacting the banking regulation act was to ensure a sound banking system is in place through these regulations which would ensure balanced growth among banks.

  • Approval of the Insurance Regulatory and Development Authority of India (“IRDAI”) under IRDAI (Registration of Corporate Agent) Regulations, 2015.

The IRDAI (Registration of Corporate Agent) Regulations, 2015 ensure that a ‘Corporate Agent’ holds a valid certificate of registration issued by IRDAI under the afore stated regulations for the purpose of solicitation and servicing in the insurance business for any of the specified category of life, general and health.

  • Approval of the RBI for change in shareholding of FPTPL under the Payment and Settlement Systems Act, 2007 and RBI license dated July 14, 2016.

The Payment and Settlement Systems Act, 2007 provides for the regulation and supervision of payment systems in India and to designate the RBI as the authority for that purpose and for matters connected therewith or incidental thereto.[10]

Analysis of the impact of the deal

Axis Bank had reported a steep decline in assets value and was unable to meet its profit margin with increasing bad loan provision. This created an effect on the net earnings of the bank declining to a reported 16.06% during the first quarter of the FY 2017.  Also, the lender asset quality had worsened by a steep increase in Gross NPA to 5.03% during the FY 2017.[11]

The acquisition of Freecharge by Axis bank acted as a strategic move which would help in creating a digital presence despite its already existing presence in the digital space through its own application ‘Axis Pay’. The boom in the digital market in India and the increased surge in online transactions over the years, can be one of the reasons for such strategic acquisition. The launch of ‘Digital India’ campaign can be considered as one of the key factors in the venture of the bank into the technology platform, this created more market opportunities by increasing its customer loyalty in the current competitive digital market players in the industry.


The need for technology shall never be eliminated and this acts as a ray of hope for the acquisition by the bank of Freecharge for over Rs. 385 crores. The e-commerce and digital payment industry are expected to grow over time and contribute to the majority of the country’s economy as per study by various research groups. The intersection of mobile technology and financial services would bring about the financial inclusion in the globe and is estimated to bring into the global commerce ecosystem transactions that could top $3 trillion by 2025[12]. The demonetization and the cashless movement that has been promoted by the government in India has propelled for the increasing demand for converting all the transactions being made either through card or through internet/phone banking.

In the past, the banks had a monopoly on transaction services[13]. However, with the increasing emergence of fintech companies and payment banks has created an influence on the banks to adopt to more customer friendly options like the e-wallets and online payments which ensures that they have a slice of the pie without being eliminated from the most attractive market, which is expected to exponential grow over time. Therefore, the acquisition can be considered to be a strategic move by Axis bank for expanding its business vertical by leaving a footprint in the mobile wallet business.



[2] Ibid





[7] freecharge.pdf?sfvrsn=4#:~:text=The%20acquisition%20marks%20the%20first,by%20a%20bank%20in%20India.&text=Kunal%20Bahl%2C%20Snapdeal%20Co%2DFounder,digital%20payments%20and%20banking%20space






[13] Ibid

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