Airtel, Vodafone, Aditya Birla Nuvo, and Tech Mahindra are among 11 applicants to have been granted "in principle" approval by the Reserve Bank of India to launch payments banks, in a bid to achieve universal access to financial services in the country.
In 2013, the Reserve Bank published a discussion paper on the way forward for banking in India, while the following year the Committee on Comprehensive Financial Services for Small Businesses and Low Income Households also released a report - both papers considering the best ways to reduce the unbanked segments of society, and both papers concluding differentiated licensing as a step in the right direction.
In the Union Budget for 2014 to 2015, the honourable finance minister announced that a bespoke structure would be put in place to enable the continuous authorization of universal banks in the private sector.
"RBI will create a framework for licensing small banks and other differentiated banks. Differentiated banks serving niche interests, local area banks, payment banks etc. are contemplated to meet credit and remittance needs of small businesses, unorganized sector, low income households, farmers and migrant work force," the minister said.
The Reserve Bank yesterday approved "in principle" 11 applications to set up payments banks; with the "in principle approvals granting 18 months to comply with outstanding requirements and conditions. Once all the conditions are met by an applicant, the Bank will consider granting a full licence for commencement of banking business.
Among the successful applicants are a number of India's top telecoms, including Airtel, Vodafone's M-Pesa, Aditya Birla Nuvo - owner of Idea Cellular -, and Tech Mahindra; with the telecoms to leverage the power of mobile - and mobile money solutions - to reach out to the unbanked segments of India's population.
"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," said Sunil Sood, managing director and CEO of Vodafone India.
"The payment bank license 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 Sood.
"We remain committed to actualize the government's vision of financial inclusion by leveraging the reach of mobile technology to service the unbanked and underserviced sections of the society."
