MUMBAI (Reuters) - India’s leading mobile phone network operators Bharti Airtel Ltd and Vodafone India are among the 11 companies selected by the country’s central bank to help set up “payments banks”, aimed at granting millions of citizens access to basic banking.
Energy-to-telecoms conglomerate Reliance Industries Ltd, controlled by India’s richest man Mukesh Ambani, which plans to set up a payments bank in a partnership with top lender State Bank of India (SBI), was also among the winners.
Payments banks will be able to take deposits and remittances but will not be allowed to lend. They are part of India’s financial inclusion push, meant to bring banking services to a country where less half the adult population has a bank account.
The aim is for payments banks to piggy-back on existing retail or other networks. Analysts also expect them to be technology-driven although they must have a physical presence.
“We see this licence as an opportunity to promote financial inclusion by providing banking and transaction services to unbanked, under-banked and small businesses,” said Arundhati Bhattacharya, chairman of SBI, which will have a 30 percent stake in the planned payments bank.
Dilip Shanghvi, the second-richest Indian, was also among those who won a permit. His company Dilip Shanghvi Family and Associates will partner Norway’s Telenor and Indian financial firm IDFC Ltd for the planned payments bank. IDFC previously won a full-service banking permit and plans to start the bank from October.
The country's postal office, and a joint venture of Aditya Birla Nuvo Ltd and third largest Indian cellphone carrier Idea Cellular were among others selected by the Reserve Bank of India.(bit.ly/1hMiyRB)
Nationwide retail store network of telecoms carriers including Bharti Airtel - whose minority partner in the planned payments bank is lender Kotak Mahindra - and Vodafone’s Indian unit are expected to help drive their payments bank operations. Both carriers welcomed the central bank move.
Fino PayTech Ltd and Cholamandalam Distribution Services Ltd, which already work with banks as agents or distribute financial products were also given provisional approval. Fino PayTech has planned more than 3 billion rupees ($46 million) investment in the payments bank and aims it to break even in three years, its chief executive Rishi Gupta said.
The companies selected will be given “in-principle” approval for 18 months, after which they will be given licences if they fulfill all conditions stipulated by the RBI, the central bank said on Wednesday.
A total of 41 companies had applied for the permit, the RBI said, adding “some of the entities who did not qualify in this round, could well be successful in future rounds.”
Vijay Shekhar Sharma, founder of mobile wallet services provider Paytm that is partly owned by Alibaba’s Ant Financial, was also selected. India’s fifth-biggest software exporter Tech Mahindra was also named among the winners.
Reporting by Devidutta Tripathy; Editing by Keith Weir and Greg Mahlich