Tech Mahindra Ltd, the software services arm of the diversified Mahindra Group, said on Tuesday it has dropped a plan to set up a payments bank.
The company is the third of 11 applicants, who had received approval from the Reserve Bank of India in August last year to start payments banks, to scrap its plans.
Tech Mahindra didn’t disclose any reason for dropping its plan in a stock-exchange filing. It follows Cholamandalam group and Sun Pharmaceutical Industries Ltd’s Dilip Shanghvi, who had tied up with Telenor Financial Services and IDFC Bank for the venture, to shelve their plans for a payments bank.
The other eight applicants are Aditya Birla Nuvo Ltd, Airtel M Commerce Services Ltd, Department of Posts, FINO PayTech Ltd, National Securities Depository Ltd, Reliance Industries Ltd, Paytm’s Vijay Shekhar Sharma and Vodafone m-pesa Ltd.
The in-principle approval is valid for 18 months, after which the entities can seek formal licences.
The RBI had given approvals for payments banks as part of efforts to drive financial inclusion. The new category of banks can offer small savings accounts and payments and remittance services to migrant labourers, low-income households and small businesses. But they cannot offer loans and accept term deposits, the main revenue generators for traditional banks.
Tech Mahindra had initially planned to start payments bank operations in the second half of 2016. The bank was to be an independent unit under the Mahindra Group led by Tech Mahindra and Mahindra Finance, a non-banking finance company focused on rural areas, as equal contributors to the new entity.
While Tech Mahindra has scrapped its payments bank plans, it entered the mobile wallet segment in December last year. The wallet, called MoboMoney, is a prepaid tap-and-pay payment solution based on Near Field Communication technology and works at both online and offline stores.
Like this report? Sign up for our daily newsletter to get our top reports.