Financial inclusion plan gets a push

Reliance, Airtel, Aditya Birla Nuvo, Vodafone, Tech Mahindra, NSDL, Cholamandalam Investment were among the 11 entities that got ‘ín-principle’ approvals from RBI; the banks would provide basic savings, deposit, payment and remittance services to people without accessing the formal banking system. Business Standard takes a look at the new licence holders:

ADITYA BIRLA NUVO: Operations to start in a year

• Growth plan: A new company for the payments bank operations with a new CEO will be set up. The payments bank company will be used to distribute financial services products and sell Idea Cellular products. It will also be used as a digital wallet to pay at retail outlets of the group and for other companies.
  

   

When will the operations start? The payments bank will take at least a year to start operations.
 

USP: The company will offer interest on the deposits to its customers. The group will also make best use of the Birla brand name.
 

Boost to existing line of business: There are innumerable opportunities for the payments bank for group’s retail operations, distribution of financial products and for the digital purse initiative of Idea Cellular.

NSDL: Already a custodian to a large investor base

• When will the operations start? No specific timeline to share, but effort would be to launch soon.
  

 

USP: NSDL is in the field of providing low-cost electronic payments. Telecom operators while providing cashless payments allow it to only their own subscribers in some cases— that would not be the case for us, said Nageswar Rao, MD & CEO, NSDL.
 

How will the existing line of business help? NSDL is the country’s largest depository handling nearly 14 million investor accounts. It is a major player in the know your customer registration space, and has also worked as a registrar on the government’s Unique Identification Authority of India project.

(Based on an interview with Nageswar Rao, MD & CEO, NSDL)

VODAFONE: A step towards a comprehensive portfolio of financial products

• Growth plan: Has partnered with several government bodies to run pilots for enabling direct transfer of wages and subsidies. The payments bank licence will enable it to build on this further and offer a more comprehensive portfolio of banking and financial products and services, accelerating India’s journey into a cashless economy.
   
• When will the operations start? Too early to say, as it is just an in-principle approval.
   
• How will the existing line of business help? With over 90,000 ‘M-Pesa’ agents, the company is already providing people in remote areas a convenient way to transfer money and make payments in a safe and secure manner. Vodafone said it remains committed to actualise the government’s vision of financial inclusion by leveraging the reach of mobile technology to service the unbanked and underserviced sections of the society.

(Based on an interview with Sunil Sood, MD & CEO, Vodafone India)

RIL: Wants the smallest payments to be made through its digital wallet

• Growth plan: The payments bank licence fits in well with Reliance Jio's much-awaited launch. RIL's gigantic ambitions in the wireless telephony space will now have a much wider footprint, as it will include its financial services play through the Jio Money play. The payments bank is a joint venture between RIL and SBI. B Sriram, SBI managing director (national banking group), said the proposed bank intends to cover 250,000 villages and 5,000 towns in three years. While it plans to start with a Rs 100-crore capital base, this will be ramped up to Rs 400 crore in three-four years, depending on business volumes.
  

 

When will the operations start? The payments bank will commence along with its telecom services launch, slated for later this year.
 

USP: Unlike other payments wallets, which currently are based on institutional tie-ups for payments, Mukesh Ambani wants the smallest payments to be made through its digital wallet, Jio Money. From paying for pizza to a cup of tea, Jio will now enable every form of payment without any cash changing hands. With its partnership with SBI, Jio will be able to bring millions of telecom subscribers into the banking system.
 

How will the existing businesses help? Through Jio Money, customers will be able to deposit money, receive payments and transfer money through their phones. If the company is looking at 100,000 customers who have a bank account, but with the payments bank he can accept digital money and transfer it to his account. It is a very large play which is why the tie up with SBI.

BHARTI AIRTEL: Riding on its 1.6 mn outlets

• Growth plan: The payments bank licence will go with the company’s plan to encash the rising mobile commerce in India.  Airtel M Commerce Services, its fully owned subsidiary, has been offering prepaid payment services in sector such as e-commerce, lifestyle and recharge since 2010 under the brand name Airtel Money. With the recent launch of its 4G mobile services, the offerings portfolio of Airtel Money will only get bigger and better.
   
• When will the operations start? Since Airtel will use its existing retail outlets to offer services, it is expected to start operations in the next few months.
  

 

USP: Airtel has about 1.6 million outlets across India, which is well positioned to deliver services through a payments bank.

DEPARTMENT OF POSTS: Widest reach an advantage

• Growth plan: The grant of payments bank licence will help the postal department use its vast network across India to provide financial services in the rural and remote areas.
   
• When will the operations start?  In the next one year through a separate subsidiary.
   
• USP: The postal network has about 154,000 points of presence spread across the villages in the country. The government expects department of posts to contribute towards furthering the Pradhan Mantri Jan Dhan Yojana through its payments bank licence.

TECH MAHINDRA:  Experienced hands

• Growth plan: Tech Mahindra has tied-up with Mahindra Finance Services for the payments bank set-up. Tech Mahindra will be providing technology backbone for the payments bank. It already has two mobile payment platforms—MoboMoney and Mobiquity . Other than using Mahindra Finance's rural network, Tech Mahindra under its Saral Rozgar programme has a network of close to 100,000 outlets. The new entity will leverage learning from each of the group companies to establish a successful payments bank model.
   
• When will the operations start? The company might begin its operations before the 18-month timeframe.
   
• USP: Tech Mahindra has been one of the largest players in the African mobile payments segment. And it will leverage those learning for the Indian market.
  

 

How will the existing line of business help? This will be part of the company's effort to create revenue streams from new digital platforms. To start with, the payment business will be a subsidiary under Tech Mahindra and in future it may be spin-off into an independent business unit.  

(Based on an interview with C P Gurnani, CEO & MD, Tech Mahindra)

DILIP SHANGHVI: Strong tie-ups

• Growth plan: Dilip Shantilal Shanghvi, promoter of Sun Pharma, has teamed up with Telenor Group and IDFC for the payments bank licence. Like all telecom operators, Telenor will also focus on driving financial inclusion in India through the mobile telephony services.
  

 

When will the operations start? Operations will commence once the blueprint is ready.
 

USP: The combined entity will focus on delivering a slew of financial services through the mobile network.
 

How will the existing line of business help? Payments bank facilities will enable last-mile connectivity to consumers by offering convenience of carrying banking transactions at their doorstep. Telenor Group is among the world’s leading providers of mobile financial services, with deployments across Asia and Europe and has the ability to deliver mass-market banking services to the unbanked.

CHOLAMANDALAM INVESTMENT: Hoping to benefit from the group’s ecosystem

• Growth plan: Will take a solution to the market, which will use both its technology and physical footprint. This will help in digitising cash transactions and providing additional services to existing and new customers of the payments bank. Focus will predominantly be on financial inclusion and on the MSME sector.
  

 

USP: Chola currently has over 534 branches spread across India and a captive base of over 750,000 customers, which is an immediate opportunity that can be tapped into.

(Based on an interview with Vellayan Subbiah, MD of Cholamandalam Investment and Finance Company Ltd)

PAYTM:

• Growth plan: It’s a three-step process — pay, buy, sale. Consumers who were able to pay and buy with Paytm earlier will be able to sale with it now.
   
• When will the operations start? Paytm’s plan is to start in less than a year because it wants to be one of the first few to start. It is hopes to start early, as it is ready with its technology and investments.
  

 

USP: Paytm is driven by payments and mobile, so ours will be a transaction-led model unlike some other players.
 

How will the existing line of business help? Paytm will create a subsidiary of the company and the other activities will be ring-fenced from the bank operations. But its existing technology and payments operations and learning will give its banking operations an edge.

(Based on an interview with Vijay Shekhar Sharma, founder & CEO, of Paytm)

FINO PAYTECH: A niche play

• Growth plan:  It has been working for financial inclusion and has been an alternative banking channel (BC) reaching out to customers in the last mile. It currently has 450 FINO Money Marts and the idea is to take the number to 2,000 in the next two years. It plans to convert these into branches and establish a good urban and rural footprint.
  

 

When will the operations start? Hoping to start operations in the next 14-15 months. Since the existing FINO marts can be converted into branches, it hopes to start with 500-800 branches. Has already invested Rs 300 crore into the business and is looking at raising another Rs 300 crore for the conversion into bank.
 

USP: It has a niche and an already existing customer segment will be a huge benefit. Moreover, it has already been acting as BCs and has money marts, so a ready captive customer segment.
 

How will the existing line of business help? Has 20,000 BCs, 450 FINO Money Marts and 15,000 merchant distribution services which will be used as it converts into a bank.

(Based on an interview with Rishi Gupta, managing director & chief executive officer, FINO PayTech)