In a long-pending move, the Reserve Bank of India (RBI) has given in-principle nod to 11 applicants to launch payments banks.
The applicants given the nod are Aditya Birla Nuvo, Airtel M Commerce Services, Cholamandalam Distribution Services, Department of Posts, Fino PayTech, National Securities Depository, Reliance Industries, Dilip Shantilal Shanghvi (promoter of Sun Pharma), Vijay Shekhar Sharma (promoter of Paytm), Tech Mahindra, and Vodafone m-pesa.
The in-principle approval granted will be valid for a period of 18 months, during which time the applicants have to comply with the requirements under the guidelines and fulfill the other conditions as may be stipulated by the RBI.
On being satisfied that the applicants have complied with the requisite conditions, the Reserve Bank would consider granting to them a licence for commencement of banking business under Section 22(1) of the Banking Regulation Act, 1949. Until a regular licence is issued, the applicants cannot undertake any banking business, RBI said.
The Reserve Bank had received 41 applications for payments banks. Draft guidelines for licensing of payments banks were released for public comments on July 17, 2014.
Based on the comments and suggestions received, final guidelines were issued on November 27, 2014. The Reserve Bank also issued clarifications to the queries on the guidelines on January 1, 2015.
Targets fin inclusion
The primary objective of setting up of payments banks will be to further financial inclusion by providing small savings accounts and payments/remittance services to migrant labour workforce, low income households, small businesses, unorganised sector entities, and other users, by enabling high volume-low value transactions in deposits and payments/remittance services in a secured technology-driven environment.
Payments banks will initially be restricted to holding a maximum balance of Rs 1 lakh per customer. After the performances of the payments banks are gauged by the RBI, the maximum balance can be raised. The minimum paid- up voting equity capital of the payments bank shall be Rs 100 crore.
Net worth of Rs 100 cr
Any additional voting equity capital to be brought in will depend on the promoter business plan. Further, the payments bank should have a net worth of Rs 100 crore at all times.
The promoter’s minimum initial contribution to the paid-up voting equity capital of payments bank shall be at least 40 per cent, which shall be locked in for a period of five years from the date of commencement of business. Shareholding by promoters shall be brought down to 40 per cent within three years from commencement of business.
Further, the promoter stake should be brought down to 30 per cent of the paid-up voting equity capital within 10 years, and to 26 per cent within 12 years.
SBI will take as much as 30 per cent in RIL’s proposed bank, while Bharti Airtel plans to give 19.9 per cent stake to Kotak Mahindra Bank.