RIL in JV pact with SBI for payment bank

Reliance Industries Limited (RIL) has teamed up with state-run banking giant State Bank of India (SBI) as the promoter of the joint venture in which SBI will have equity investment of up to 30 per cent.

The payments bank will leverage SBI's nationwide distribution network and risk management capabilities and RIL's retail and telecom businesses.

RIL said it will deploy state-of-the-art technology, build scalable infrastructure and create extensive branch and business correspondent network in order to provide last-mile access and intuitive user experience to all sections of society.

Aditya Birla Group, the Future Group and money transfer service provider GI Technologies are among those that have applied for payments bank licence as the last date for applying for it ends today.

Aditya Birla Group has submitted its application for a payments bank licence through Aditya Birla Nuvo Limited.

"Aditya Birla Nuvo, on 2 February 2015, submitted an application to the Reserve Bank of India for obtaining licence for setting-up Payments Bank," the company said in a BSE filing.

Aditya Birla Nuvo will be the promoter of the new payments bank holding 51 per cent equity capital. Idea Cellular Ltd, also an Aditya Birla Group company, will be holding the balance 49 per cent.

Kishore Biyani-promoted Future Group today said the proposed bank will be a separate company under the group.

"The group proposes, subject to the grant of the licence and other regulatory approvals, to name the entity, NuFuture Payments Bank," the company said in a statement.

"RBI's vision for the payments bank offers us an opportunity to bring us closer to our goal of offering more choice and convenience to Indians that help them plan their savings and consumption better and lead to a better quality of life for everyone," Biyani said.

The proposed payments bank will leverage Future Group's extensive presence across the country to reach out to depositors through its physical presence in 168 cities across the country and rural locations in Gujarat and Punjab through its retail networks.

Money transfer company has also GI Technology applied for a payments bank licence as it looks to widen its range of offerings to customers.

"We offer remittances services to migrant workers," said Ramu Ramsamy, managing director, GI Technology. "The licence will help us extend other financial services to these unbanked customers.

Payments banks would have to tie up with business correspondents and universal banks to be commercially viable." Bharti Airtel, Paytm, Fino Paytech are among those that have applied for payments bank licences while SKS Microfinance and Dewan Housing Finance plan to set up small banks. Airtel M Commerce Services Ltd (AMSL), a wholly-owned subsidiary of Bharti Airtel, has said it will apply for a licence with Kotak Mahindra Bank taking a 19.90 per cent stake in the venture.

"Applying for a payment bank would give Kotak Bank an opportunity to tap a customer segment which the bank would not have done quickly," said Dipak Gupta, joint managing director, Kotak Mahindra Bank. "Telcos have phenomenal access. Kotak Bank would be able to source new customers through this tie-up." Bharti Airtel already has a pre-paid payment instrument (PPI) licence.

According to the banking norms, Kotak can invest up to 30 per cent in the proposed venture. "We have decided to invest up to 19.9 per cent," Gupta said. "The proposed payment bank would need a minimum net worth of Rs 100 crore which we will contribute to."

Other banks such as ICICI Bank, Yes Bank and RBL Bank are seeking to tie up with entities planning to apply for payment bank licences.

Today, 2 February was the Reserve Bank of India's deadline for applications for payments and small bank licences.

As per RBI guidelines on payments bank, they can raise deposits of up to Rs1 lakh per individual, issue ATM/debit cards and sell simple financial products such as mutual funds and insurance products. Payments banks cannot, however, issue credit cards or undertake lending activities.