JOIN USThe future is "uncertain" for payments banks and the model aimed at deepening financial inclusion requires regulatory support in order to be effective, a report said Monday.
The report from economists at SBI comes days after Aditya Birla Payments Bank, of the handpicked licensees, reportedly decided to shut down from October 2019. Vodafone m-Pesa had also shut shop earlier this month.
"The future is uncertain, but in time business will expand and evolve, with the help of regulatory and Government support," they said in the note. Vodafone's mobile phone-based banking service M-Pesa shut down its operations in the country with effect from July 15.
Sources told BL that M-Pesa had not been taking new deposits for a while now.
The payments bank model "seems to have failed to achieve the stated objectives" with only four entities becoming operational out of the 11 players licensed in 2014, it said. Vodafone and Aditya Birla's Idea Cellular were among the 11 companies that took payments bank (PB) licenses from the Reserve Bank of India (RBI) in 2014.
The mobile phone-based money transfer application of Vodafone, launched in 2013, had more than 8.4 million customers in India, according to data on the Vodafone website dated January 5, 2017. It has footprints in Kenya, Tanzania.