Reserve Bank of India approves 11 payments banks

Mumbai: The Reserve Bank of India (RBI) on Wednesday opened up the domestic banking sector to industrial houses by granting in-principle approval to 11 entities including Reliance Industries, Aditya Birla Nuvo, Airtel, Vodafone and Tech Mahindra to set up payments banks in India. The other entities, which were granted appr-oval, include Cholamandalam Distribution, Department of Post, Fino Pay Tech and NSDL.

Payments banks will provide a limited range of products, such as, acceptance of demand deposits and remittances of funds, but will have a widespread network of access points particularly in remote areas, either through their own branch network or through business correspondents or through networks provided by others. They can accept deposit upto Rs 1 lakh, but are not permitted to lend.

The Reserve Bank said that the “in-principle” approval gr-anted would be valid for a period of 18 months, during which time the applicants have to comply with the requirements under the guidelines and fulfil the other conditions.

Going forward, RBI said that it intends to use the learnings from this licensing round to appropriately revise the guidelines and move to giving licenses more regularly virtually ‘on tap’. The eleven entities were chosen from among 41 applications.

Giving a ray of hope for those who didn’t make it to the final list, RBI said that some of the entities who did not qualify in this round could well be successful in future rounds. “We see this license as an opportunity to promote financial inclusion by providing banking and transaction services to unbanked, under- banked and small businesses,” said Arundhati Bhattacharya, chairperson, SBI.

“With over 90,000 ‘M-Pesa’ agents, we are already providing people in remote areas a convenient way to, transfer money and make payments in a safe and secure manner. The payments bank licence will enable us to build on this further and offer a more comprehensive portfolio of banking and financial products and services, accelerating India’s journey into a cashless economy,” said Sunil Sood, managing director and CEO, Vodafone India.