Indian operators Bharti Airtel (NSE:BHARTIARTL), Vodafone India, Idea Cellular (BSE: IDEA), Reliance Communications (BSE: RCOM) and Uninor are among 11 applicants to have won approval “in principle” to set up ‘payments banks’.
The Reserve Bank of India (RBI) aims to set up these banks to promote financial inclusion by providing savings accounts and payments/remittance services to the unbanked. These banks will not, however, be able to lend.
A spokesperson for leading mobile operator Airtel said: “We are confident that this move will pay a pivotal role in bringing millions of unbanked Indians into the folds of banking.” Airtel’s minority partner in its planned payments bank is lender Kotak Mahindra.
Sunil Sood, CEO of number two Vodafone India said the licence will enable the company to build on its mobile wallet service M-Pesa and offer a more comprehensive portfolio of banking and financial products and services.
There are currently more than 90,000 M-Pesa agents providing people in remote areas with money transfer and payment services, he noted, adding that the company has also partnered with several government bodies to run pilots for enabling the direct transfer of wages and subsidies.
“We remain committed to actualise the government’s vision of financial inclusion by leveraging the reach of mobile technology to service the unbanked and underserviced sections of society,” he said.
RCom parent, conglomerate Reliance Industries, plans to set up a payments bank with the State Bank of India (SBI).
Uninor, the local unit of Norway’s Telenor, will partner with Dilip Shanghiv of Dilip Shanghiv Family & Associates (DSA) and Indian financial firm IDFC.
DSA stated that the firm believes payment banking “is a step in the direction of enabling last-mile connectivity to consumers by offering convenience of carrying out banking transactions at their doorstep”.
Idea has partnered with conglomerate Aditya Birla Nuvo.
Reliance Industries and Idea were not immediately available for comment.
India’s Department of Posts, Fino PayTech and Cholamandalam Distribution Services were among others to have been granted in-principle approval. The 11 will be granted full licences after 18 months if they fulfil conditions set down by the central bank.
The RBI noted that the Committee of the Central Board (CCB) has said it is difficult to predict which business model would be most successful.
“Going forward, the Reserve Bank intends to use the learning from this round to appropriately revise the guidelines and move to giving licences more regularly,” it added. “The Reserve Bank believes that some of the entities who did not qualify in this round could well be successful in future rounds.”