Mukesh Ambani-led Reliance Industries Ltd, diversified firm Aditya Birla Nuvo, IT firm focused on e-governance and document management Vakrangee Ltd are among the companies that have applied for payments bank licence with the Reserve Bank of India.
PE firm Blackstone-backed business correspondent service provider FINO PayTech Ltd, Murugappa Group’s non-banking finance company (NBFC) arm Cholamandalam Investment and Finance (CIF), and Future Group – through its founder Kishore Biyani – are the other companies which have sought to set up payment banks.
While Aditya Birla will name the proposed payment bank as Idea Payments Bank Limited, Future Group has decided to name the entity as NuFuture Payments Bank, subject to the issue of the licence and the other regulatory approvals.
RBI had issued guidelines in November last year for setting up new category of banks to support financial inclusion by providing small savings accounts, payments/remittance services to migrant labour workforce and low income households and supply of credit to small business units among others.
Companies with a large customer base and wide distribution network are said to be well suited for the payments bank model.
Reliance Industries said it will promote the payments bank in a joint venture with State Bank of India (SBI), which will hold up to 30 per cent equity.
Aditya Birla Nuvo – which is the biggest shareholder in India’s third-biggest cellular carrier Idea Cellular Ltd – will own 51 per cent stake in the proposed payment bank, while the remaining will be held by Idea Cellular.
Mumbai-based Vakrangee, from being a sub-contracted IT enabler in e-Governance projects, has transformed into a retail house offering banking and financial services to reach the rural population. Earlier in May last year, Vakrangee had also got RBI approval to set up and operate around 15,000 white label ATMs.
The company was incorporated in 1990 by Dinesh Nandwana, a chartered accountant, and is a prominent system integrator and end-to-end service provider for various Mission Mode Projects under National e-Governance Plan. Vakrangee now works with 26 public sector banks to run real-time ultra small branches in rural areas.
On the other side, Mumbai-based FINO PayTech Ltd (formerly FINO Ltd) is involved in the financial inclusion sector providing micro banking technology services besides helping banks reach out to the unbanked through its ‘business correspondent’ (BC) unit. Fino PayTech is said to have catered over 80 million individuals for banking needs in 29 states in India.
It had raised around Rs 150 crore from PE major Blackstone in 2011 by diluting 21 per cent equity stake in the company. In 2012, FINO had acquired Nokia Money and launched a service called Takatak Money, which provides money transfers, utility bill payments, mobile & DTH recharges.
Meanwhile, Future group said that the proposed payments bank will leverage its nationwide presence to reach depositors through its retail networks like Big Bazaar, KB’s, Nilgiris, Big Bazaar Direct and rural distribution network, Aadhaar, among others.
“Financial inclusion and financial services are an integral part of customer proposition of leading retailers in a number of emerging markets around the world. The RBI’s vision for the payments bank offers us an opportunity to bring us closer to our goal of offering more choice and convenience to Indians that help them plan their savings and consumption better and lead to a better quality of life for everyone,” Kishore Biyani said.
Mobile wallet company Paytm – owned by Noida-based One97 Communications – and Bharti Airtel-owned Airtel Money are the other companies which have applied for the payment bank licence. Another mobile wallet venture MobiKwik is also likely to apply for a payment banking permit, media reports suggested recently.
Payment banks are meant for simple banking transactions and will not be allowed to lend or accept term deposits. Customers can’t keep more than Rs 1 lakh in their account. The last date to apply is 2 February.
The ‘payments’ bank will be required to have at least 25 per cent of physical access points, including business correspondents, in rural centres and a controlling office for a cluster of access points should also be established for control over various outlets and customer grievance redressal.
Meanwhile, UAE Exchange India, a part of the Global UAE Exchange Group, has applied for small finance bank licence.
(Edited by Joby Puthuparampil Johnson)