Bharti Airtel subsidiary AMSL (Airtel M Commerce Services Limited) has received a payments bank licence from the Reserve Bank of India (RBI).
It is the first firm in the country to be granted a full banking licence after the RBI provisionally approved eleven companies to provide banking services in August 2015. Now that its initial approval has been upgraded to a full licence, AMSL will be able to offer mobile banking services to India’s unbanked population, which numbers in the millions.
Companies that hold a payments licence are able to hold deposits and make transfer payments for customers, but they are not permitted to make loans. Despite this, AMSL and other prospective licence holders are expected to target small businesses and relatively low earners such as farmers and migrant workers.
The list of firms granted initial approval for a payments licence includes major players in India, among them the parent company of Idea Cellular, Aditya Birla Nuvo; Vodafone M-Pesa; and Reliance Industries, the owner of disruptive newcomer Reliance Jio Infocomm which is currently preparing to roll out pan-Indian 4G. With the three largest players and a key market entrant looking to obtain payments licences, the concept looks set to gain traction in India.
Airtel’s partner in the banking sector is Kotak Mahindra Bank, which in February took control of a 20% stake in AMSL. Obtaining a payments licence will enable the operator to bolster its Airtel Money service by acting more as a traditional bank.