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.