Kotak Mahindra Bank, the country’s third-biggest bank by market capitalisation, has signed a share subscription and shareholders’ agreement with Bharti Airtel and its 100% subsidiary Airtel M Commerce Services Ltd. (AMSL) to buy a 19.9% stake in the latter for Rs 98.38 crore.
This follows an announcement by Bharti Airtel in January 2015 that subject to RBI granting a payments bank licence to AMSL, Kotak Mahindra Bank would do so. Then, Gopal Vittal, MD and CEO (India and South Asia), Bharti Airtel had said, “Kotak Mahindra Bank Limited is one of the leading and most respected private sector banks in India.
Kotak’s banking expertise coupled with Airtel’s strength in telecom will help deliver financial services to millions of unbanked citizens across the country.”
In August 2015, RBI, as part of its objective to extend the scope of financial inclusion, granted in-principle approvals to AMSL and 10 other entities to setup payments banks.
As per the guidelines issued by it, a payments bank can accept deposits up to Rs1 lakh from individual customers, issue ATM and debit cards, offer payments and remittance services, and act as a distributor of simple financial products like mutual funds units and insurance products.
The central bank, however, has barred payments banks from undertaking lending activities.
In a statement issued on Tuesday, Kotak Mahindra Bank said the deal would be completed in the next 10 days.
As per RBI guidelines, a scheduled commercial bank can own a stake in a payments bank to the extent permitted under Section 19 (2) of the Banking Regulation Act, 1949, which states, “No banking company shall hold shares in any company of an amount exceeding 30% of the paid-up share capital of that company or 30% of its own paid-up share capital and reserves, whichever is less.”
* Bharti Airtel had made an announcement in this regard in January 2015
* Kotak Mahindra Bank said the deal would be completed in the next 10 days
* As per norms, a payments bank can accept deposits up to Rs 1 lakh from customers