Aditya Birla Nuvo, one of the eleven entities that have received in-principle approvals from the Reserve Bank of India...
Aditya Birla Nuvo, one of the eleven entities that have received in-principle approvals from the Reserve Bank of India (RBI) to set up payments banks, on Friday said it has incorporated a new subsidiary for the same purpose.
The new entity, Aditya Birla Idea Payments Bank Ltd, is a 51:49 joint venture (JV) between it and Idea Cellular — its telecom subsidiary in which it owns 23.26%.
The RBI, as part of its objective to further financial inclusion, in August last year granted in-principle approvals to 11 entities to set up payments banks.
As per the norms issued by it, a payments bank can accept deposits up to Rs 1 lakh from individual customers, issue ATM and debit cards, offer payments and remittance services, and act as a distributor of simple financial products such as mutual funds units and insurance products.
The central bank, however, barred payments banks from undertaking lending activities.
In a report published in December, 2014, Deloitte said, “Penetration of mobiles has gone far ahead of bank account penetration, resulting in telecom companies penetrating un-banked and under-banked customer segment.”
Interestingly, the RBI specifically mentioned “mobile telephone companies” as existing business entities that may apply to set up payments banks.
Now, with a JV between Idea and ABNL. the road seems to have been paved by the latter to leverage from the 17.2 crore (as of December, 31, 2015) subscriber base of the former by offering them payments banking services.