Telecom operator Idea Cellular in a regulatory filing said that it has taken note of the approval of a draft scheme of amalgamation by the board of directors of its wholly owned subsidiary Idea Mobile Commerce Services Limited (IMCSL).
"The Scheme of Amalgamation contemplates the merger of IMCSL with Aditya Birla Idea Payments Bank Limited (ABIPBL), an entity which has been recently incorporated, wherein Aditya Birla Nuvo Limited (a promoter of Idea) holds 51 per cent equity and the balance 49 per cent equity is held by the Company," Idea said.
"ABIPBL will be applying to the Reserve Bank of India for grant of payments bank licence in due course," Idea said.
For the year ended March 31, 2016, IMCSL had revenues of Rs 7.21 crore. The net worth of IMCSL as on March 31, 2016 is Rs 1.46 crore comprising miniscule percent of Idea's net-worth.
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"Upon completion of merger, ABIPBL will be issuing equity shares to the Company in lieu of its existing shareholding in IMCSL. Following completion of the merger of IMCSL into ABIPBL, the Company will continue to hold 49 per cent equity in ABIPBL," Idea said.
The joint venture firm, ABIPBL, between Aditya Birla Nuvo and Idea Cellular formed in February.
Payments banks are allowed to collect deposits (initially up to Rs 1 lakh per individual), offer Internet banking, facilitate money transfers and sell insurance and mutual funds.
A total of 11 entities, including Reliance Industries, Airtel M Commerce Services Limited, Vodafone m-pesa, Tech Mahindra and Department of Posts were given 'in-principal' approval by RBI last year to set up such niche banks.
Out of these, Airtel M Commerce Services in only entity known to have received payments bank licence.