Telecom major, Bharti Airtel, is hoping to enter the banking space by converting its existing prepaid payment service Airtel Money into a payments bank. The company will apply for a licence, it said in a release on Thursday.
Through Airtel Money, the company offers variour payment options and money transfer services. The company’s other product offerings include a business correspondent tie-up with Axis Bank and business-to-business payment collection services.
Bharti Airtel will tie-up with Kotak Mahindra Bank for the payments bank and KMB will acquire a 19.90% stake in Airtel M-Commerce, a subsidiary of Bharti, if the company get licence from RBI, said Kotak Mahindra Bank in a release on Thursday.
“Bharti Airtel has the technology and physical infrastructure, a well-entrenched distribution network in rural and remote areas and has the largest telecom customer base, coupled with our banking expertise, this clearly is a win-win for both,” said Dipak Gupta, joint MD of KMB.
In a bid to push the agenda of financial inclusion and make banking available to the un-banked and under-banked population, RBI had issued guidelines for licences to set up payments bank and small finance bank last year.
RBI had said it hopes that telecom companies and firms with a strong rural franchise apply for the licence of payments bank. A payments bank will be allowed to take deposits up to Rs 50,000 and offer payment and settlement services but will not be allowed to lend. The bank can earn through investments in government bonds and other approved securities. The RBI recently extended the deadline for application for licences to February 2.