The Reserve Bank of India has granted ‘in-principle’ approval to 11 applicants to open payment banks from 41 applications that it received. The approved applicants include: Aditya Birla Nuvo, Airtel, Cholamandalam Distribution services (a financial services co), Department of Posts, Fino Paytech, National Securities Depository Limited, Reliance Industries Limited, Sun Pharma founder Dilip Shantilal Shanghvi, Paytm’s Vijay Shekhar Sharma, Tech Mahindra and Vodafone.
The approval will be valid for 18 months, during which time the applicants have to comply with the requirements under the Payments Banks Guidelines and fulfill other conditions as issued by RBI. Post which, RBI will consider granting a license for commencement of banking businesses “under Section 22(1) of the Banking Regulation Act, 1949. No applicant will be allowed to undertake any banking business without the regular license issued by RBI, as reported by NDTV Gadgets.
In November 2014, RBI had issued guidelines for companies seeking to convert themselves into small finance or payment banks. The guidelines quoted the eligibility criteria and the can’s and can not’s policies for the banks. It also mentioned that the foreign shareholding in the payments bank would be as per the Foreign Direct Investment (FDI) policy for private sector banks and they must have a high powered Customer Grievances Cell to handle customer complaints.
Paytm Wallet already has 100 million digital wallet users in India. With the help of this new opportunity to start payment banks, it might open up new gateways for it to enroll services on its platform so as to lure more customers as against its competition.
As in case of other companies who got clean chit from RBI, the opportunity will help them set up large mobile user base and convert their mobile users into banking customers for both telecom companies Airtel and Vodafone. Company Fino PayTech, which already has a strong technology for financial inclusion, with the help of payment banks opportunity will be able to provide reach to banks in rural areas, thereby resulting in growth and development of the rural sector of the country.