Telecom players Airtel and Vodafone, Mukesh Ambani-led Reliance Industries Limited (RIL) and India Post were among the 11 that the Reserve Bank of India (RBI) allowed on Wednesday to set up no-frills “payments banks.”
Payments banks can take deposits of up to Rs 100,000 and offer simple financial products such as mutual funds and insurance, but will not be allowed to lend. They can set up ATM kiosks and issue debit cards, but cannot offer credit cards.
They are aimed at giving access to banking services to millions of Indians who have remained outside the formal financial system, as commercial banks have not been able to reach them due to inadequate infrastructure.
Aditya Birla Nuvo, Tech Mahindra, Vijay Shekhar Sharma (promoter of mobile wallet Paytm), Dilip Shanghvi (MD of Sun Pharma), National Securities Depository Ltd, Fino PayTech and Cholamandalam Distribution Services are the others whom the RBI has granted “in-principle” approval to set up such banks.
A total of 41 firms 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 and CEO, Paytm said, “With this nod from the RBI we will be able to further drive our overall commitment to financial inclusion for the unbanked segment, modernise payment systems and build more trust for our services.”
“With over 90,000 M-Pesa agents, we are already providing people in remote areas a convenient way to transfer money and make payments. The licence will enable us to build on this,” said Sunil Sood, MD, Vodafone India.
According to Kavery Banerjee, secretary, Department of Posts, “This will help us to service rural areas where we have wide reach.”
“The move will play a pivotal role in bringing unbanked Indians into the folds of banking,” a Airtel spokesperson said.
“We believe that payments bank facilities is a step in the direction of enabling last-mile connectivity to consumers by offering convenience of carrying banking transactions at their doorstep," Dilip Shanghvi Family & Associates (DSA) said in a statement. DSA is the main promoter in the application along with Telenor Group and IDFC.