More join the queue for payments bank licence

Our Bureau Updated - February 02, 2015 at 11:18 PM.

Reliance/SBI, Aditya Birla Nuvo among the hopefuls

HYDEARABD, TELANGANA, 10/09/2014: Villagers in Toopran in Medak district at the State Bank of India office on Wednesday to open accounts under the Pradhan Mantri Jan Dhan Yojana (PMJDY) launched by the Prime Minister Narendra Modi recently. --- PHOTO: NAGARA GOPAL

A clutch of hopefuls — ranging from big to small and known to unknown — make up the list of 40-odd applications seeking a licence for starting a niche bank.

On the one hand, the Reserve Bank of India has received applications from Reliance Industries Ltd, Aditya Birla Nuvo Ltd, Bharti Airtel and Vodafone. On the other, there are virtually unheard of aspirants such as Village Financial Services from Kolkata and GI Technology from Chennai

The deadline for submission of applications for niche banks – payments banks and small finance banks ended on Monday after being extended by the RBI from January 16 to February 2.

In some cases, the opportunity has spawned interesting partnerships.

For instance, RIL, India’s largest private sector company, said it will promote a payments bank in which State Bank of India will be a joint venture partner with an equity investment of up to 30 per cent.

“The payments bank will leverage SBI’s nationwide distribution network and risk management capabilities along with the substantial investments made by RIL in its retail and telecom businesses,” RIL said in a statement.

The official list of applicants for both payment and small finance banks is expected to be released by the RBI later this week.

What is a payments bank?

It is aimed at enabling payments and remittances to migrant labour workforce, low income households and small businesses that do not have access to regular banking branches. The maximum deposit that a payment bank can accept from an individual customer is ₹1 lakh. A payments bank can issue you a debit and ATM cards for easy transactions. However, it cannot undertake any lending activity.

How is a small bank different?

Small bank can do everything that a large bank can do but at least 50 per cent of its loan portfolio should constitute loans and advances of less than ₹25 lakh.

Big names in the fray

RIL-SBI, Vodafone, Idea Cellular-Aditya Birla Nuvo, Bharti Airtel, Videocon, Future Group, IIFL, UAE Exchange

Published on February 2, 2015 17:45