| Thursday , August 20 , 2015 |
Fat cats get to taste bank slice, at last- Payment bank licences for 11 aspirants | |
| Our Special Correspondent | |
 The RBI today decided to hand out 11 payment bank licences to a clutch of promoters who will be permitted to set up niche banks offering a range of basic banking and remittance services but won't be allowed to lend money. The new bank licensees include the Department of Posts, which has a sprawling network of over 1.5 lakh post offices across the country. The RBI said the in-principle approval would be valid for 18 months, during which time the applicants must comply with the relevant guidelines. Reliance Industries - the country's largest private conglomerate with revenues of over Rs 4 lakh crore last year - was among those that crashed through the barriers that have kept corporate giants out of the banking space for close to 50 years. The others include Aditya Birla Nuvo, Tech Mahindra, Airtel M Commerce Services Ltd, Vodafone m-pesa Ltd, and the National Securities Depository Ltd, which is the largest institution in the country handling the settlement of dematerialised securities in the country. Licences were issued to two individuals - Calcutta-born and educated Dilip Shanghvi of Sun Pharmaceuticals and Gurgaon-based Vijay Shekhar Sharma, founder of PayTM, India's largest mobile commerce platform. Cholamandalam Distribution Services and FINO PayTech also nudged ahead of 30 other suitors who were jockeying for a licence. "The RBI has chosen entities with greater access to capital and a large client base," said Shinjini Kumar, head of banking at PricewaterhouseCoopers. Reliance Industries has already brought in State Bank of India, the country's largest bank, as a 30 per cent partner in its venture and looks all set to make a dramatic entry into the banking space. "We see this licence as an opportunity to promote financial inclusion by providing banking and transaction services to unbanked, under-banked and small businesses," said SBI chairman Arundhati Bhattacharya. Shanghvi is putting up his own money and will be joining hands with the Telenor group - one of the world's largest mobile telephony companies - and IDFC, an infrastructure financial institution. Others spoke of making big investments - and some said they would prefer to go it alone. "We definitely want to launch a payment bank much earlier than 18 months. We believe that we can go it alone. We won't need anybody else," said Sharma of PayTM. "We intend to invest over Rs 300 crore and look to break even in the next three years," said Rishi Gupta, MD and CEO of FINO PayTech Ltd NSDL CEO & MD G.V. Nageswara Rao also said the depository institution would like to go it alone "but was keeping its options open". Among those who failed to win the licence were Kishore Biyani who runs the Food Bazaar chain and a host of other retail formats. Other unsuccessful bidders were Itz Cash Card and Oxigen Services (India) Pvt Ltd. In April last year, the RBI had issued full-fledged banking licences to IDFC and Calcutta-based Bandhan Financial Services, leaving corporate giants out in the cold after a rigorous vetting process. But it soon opened the gate a little wider by announcing plans to issue a fresh set of licences for niche banks, triggering another mad scramble. The payment banks are the first set of differentiated banks that the RBI has cleared, breaking with the tradition of permitting only universal banking that offer the full suite of banking services. In July last year, finance minister Arun Jaitley had said in his budget speech: "Differentiated banks... are contemplated to meet credit and remittance needs of small business, unorganised sector, low-income households, farmers and migrant workforce." Later this year, the RBI is due to hand out another set of licences for the establishment of small banks that will provide basic banking products within a very limited area of operation. The need for these niche banks arose after the RBI found that just 40 per cent of adults had formal bank accounts. The trigger for the niche bank licences stemmed from the desire to bring a large population outside the pale of banking within the embrace of financial inclusion. An external advisory committee first drew up the shortlist from the 41 applicants for payment bank licences. The recommendations were then placed before an internal screening committee consisting of the governor and the four deputy governors of the RBI. The internal committee prepared a final list of recommendations for the Committee of the Central Board (CCB), which independently scrutinised all the applications. The CCB approved the list today. The RBI gave some hope to those who failed to win licences in this round. "Going forward, the Reserve Bank intends to use the learning from this licensing round to appropriately revise the guidelines and move to giving licences more regularly, that is, virtually on tap. The Reserve Bank believes that some of the entities who did not qualify in this round, could well be successful in future rounds," it said. http://www.telegraphindia.com/1150820/jsp/frontpage/story_38175.jsp#.VdU5B9Sqqko |