Bharti Airtel, India's largest mobile operator with over 215 million subscribers said that the company will apply for a payment bank license with a tie up with Kotak Mahindra Bank, which will take a 19.9 per cent stake in Airtel's mobile commerce arm, Airtel m-Commerce Services. Airtel is expected to leverage its large retail distribution reach especially in rural and remote parts of the country to market its banking service.
Airtel said that its wholly owned subsidiary Airtel m-Commerce Services is seeking to convert its existing prepaid payment instrument license into a payments bank license to be issued by the Reserve Bank of India (RBI). A payment bank will initially be restricted to holding a maximum balance of Rs1 lakh per individual customer, apart from being allowed to issue ATM/debit cards as well as other prepaid payment instruments, except for credit cards. They can also distribute non-risk sharing simple financial products like mutual funds and insurance products.
Gopal Vittal, managing director and CEO (India and South Asia) of Bharti Airtel
The RBI's vision for differentiated banks represents a significant step in furthering India's financial inclusion agenda. The RBI guidelines provide an exciting and challenging opportunity for an entity like us to contribute in a meaningful manner to drive financial inclusion.
Kotak Mahindra Bank's joint MD Dipak Gupta
Payment banks have the potential to leapfrog India's financial inclusion agenda. Basic but critical services such as small savings accounts, remittances, etc will bring in a large number of low-income households and small businesses under the formal banking network.
