Reserve Bank of India Grants Payments Bank Approval to Create Access for Citizens (Aug. 24, 2015)
In an effort to grant millions of Indian citizens access to basic banking features, the Reserve Bank of India (RBI) granted approval to 11 companies to set up payments banks. Companies receiving approval included telecoms, tech firms and the post office.
“The objectives of setting up of payments banks will be to further financial inclusion by providing small savings accounts and payments/remittance services to migrant labor workforces, low income households, small businesses, other unorganized sector entities and other users,” according to the Guidelines for Licensing of Payments Banks issued last November. However, payments banks will not be able to lend money or issue credit cards, according to reports.
The approvals were granted “in principle,” meaning the companies have 18 months to comply with requirements in the guidelines, as well as other conditions required by the RBI, before being granted a license to conduct banking business.
The 11 applicants receiving approval were Vodafone M-Pesa Ltd.; energy, textiles and telecom conglomerate Reliance Industries Ltd.; the country’s post office Department of Posts; Shri Vijay Shekhar Sharma, founder of mobile wallet services provider Paytm; software exporter Tech Mahindra Ltd.; electronic services provider Airtel M Commerce Services Limited; tech firm Fino PayTech; conglomerate Aditya Birla Nuvo Ltd.; wealth manager Cholamandalam Distribution Services Ltd.; businessman and one of the wealthiest men in India Shri Dilip Shantilal Shanghvi; and National Securities Depository Ltd., a depository for the equity market in India.
The RBI received 41 applications to set up payments banks and said it likely will grant additional approvals in the future.