PNB plans EGG-shaped virtual bank

A virtual bank with no brick and mortar branches on the lines of Egg Bank of the UK may not be very far away in India.

The Delhi-based public sector Punjab National Bank (PNB) has made a presentation to the Reserve Bank of India on setting up a virtual bank.

"We made presentations on our proposed model to the central bank and are awaiting a response," PNB sources said.

PNB is trying to leverage its technology platform in creating a virtual bank. The bank has one of the largest networks of inter-connected branches in Asia, with 900 branches on the core banking network.

PNB plans to float a separate subsidiary as a virtual bank to attract young customers who like "platform independence".

If the project takes off, a customer will use the internet banking platform developed by PNB for transactions, to deposit cheques at the bank's drop boxes and withdraw cash from its automated teller machines.

The RBI, however, has concerns about drug or other tainted money coming into the country. The bank will have to be extra cautious on accounting practices and in implementing the 'know your customer' guidelines since all customers would be virtual.

The concept of a virtual bank was pioneered by Egg Bank of the UK. Egg was created as a strong retail brand on the lines of Virgin and Orange, a brand designed by the customers and for the customers.

Egg was conceptualised by Prudential chief Peter Davis to reinvent financial services in 1997 when the UK banks and insurance companies were unpopular among the public for poor products, shocking services and the low interest rates on deposits.

Egg was formally launched in October 1998 and within five months had half a million customers and a pound sterling 5 billion balance sheet "" the target that had been scheduled to be hit in five years.