Airtel’s proposed tie-up with Kotak Mahindra Bank is the first formal partnership announced by an existing lender and a non-bank entity aspiring to get into the space. Kotak Mahindra Bank will have a 19.9 per cent stake in the venture.
Payments banks are aimed at encouraging savings and help with remittances, although RBI has put a cap on the stake which can be held by commercial banks in such entities.
“We can look at payment bank as an asset origination opportunity,” Kotak Mahindra Bank (KMB) Joint Managing Director Dipak Gupta told PTI.
Airtel network will be the most important strength for the business, he said, adding that the bank is looking at this only as an investment at present.
Payments bank is a “low value-high volume” business and the Kotak is looking at it as a new “product market opportunity”.
Gupta said KMB is the second shareholder after Airtel in the venture. The bank is open to stake sale to investors like private equity funds, he added.
Airtel Money has been in the market as a prepaid payment instrument for a long time now. Gupta said that side of the business will continue independently, even if the venture gets payment bank licence.
Payments banks are not allowed to lend by themselves, but Kotak Mahindra Bank (KMB) can meet the credit needs of customers, who will served by Airtel’s network of over 13 lakh touch points across the country, he said.
Asked if the private sector lender will be comfortable lending to this segment, considering the small ticket size of loans, he said there is an opportunity in payment banks.
According to reports, mobile telephony companies like state-run BSNL, Vodafone and Telenor are looking to enter the fray, after the RBI came out with the final guidelines on establishing payment banks and small finance banks late last year.
The last date for applying for the two, which will kick-start ‘differentiated banking’ regime in the country, is February 2.