The Aditya Birla Group plans to launch its payments bank through the newly formed Aditya Birla Financial Services once the merger of Aditya Birla Nuvo with Grasim Industries is completed by end of September quarter.
Sushil Agarwal, Whole-Time Director and Group CFO, Grasim Industries, told BusinessLine that the payments bank licence was issued to Aditya Birla Nuvo and Idea Cellular combine before the merger between Grasim and AB Nuvo was proposed and formation of full-fledged financial services company.
But now with the merger receiving almost all approvals, the the payments bank licence would be transferred to the newly formed entity Aditya Birla Financial Services that will hold all the financial business interest of the Group, including insurance, mutual fund, NBFC and housing finance.
Asked about the payments bank licence held by both Idea Cellular and Vodafone which are in merger talks, Agarwal said one of these entities would surrender its licence post merger and tie-up ABFS.
In 2015, RBI has granted licences to 11 companies to start payments banks, but only four entities have started operations.
As part of the scheme, AB Nuvo will be first merged with Grasim and the financial services will be spun off and listed separately at a later stage.
Last August, when the merger was proposed, there was misconception among investors that it is being done to use the cash reserves of Grasim in Idea Cellular which is facing intense competition from latest entrant in telecom space Reliance Jio.
The proposal received all-round support after the Group clarified that Idea Cellular has nothing to do in the proposed merger.
In March, Vodafone and Idea, ranked second and third largest, proposed to join hands, excluding Vodafone India’s stake in Indus Towers, to take on Jio.
Kumar Mangalam Birla, Chairman, Aditya Birla Group, said the financial services business of Aditya Birla Nuvo is among the top five fund managers and is well placed to grow rapidly, given the under-penetration of financial products and services in India.