 "Kerry Agiasotis")
Western Union, the world's largest money-transfer company, is planning to apply to the Reserve Bank of India (RBI) for a payments bank licence.
"We are definitely looking at applying for payments bank. It is an opportunity for us and we are visiting it. The payments bank guidelines are a reflection that we need to be able to provide a broader set of financial services to a very broad community and the traditional ways of doing that are just not working," Kerry Agiasotis, president & global managing director, Western Union Business Solutions, told Business Standard.
In the draft norms for payments banks, RBI has said telecom companies, retailers, pre-paid instrument issuers (PPIs), non-banking financial companies (NBFCs), real estate cooperatives and public sector entities can apply to get a licence to set up payments banks. The minimum paid-up capital for such a bank is required to be Rs 100 crore, of which the promoters' contribution would be at least 40 per cent.
Payments banks are allowed to accept deposits and facilitate remittances and payments but cannot lend. They are also expected to offer only demand deposits - current account and savings deposit products and not fixed deposits.
Western Union currently has two divisions in India - one that looks after the consumer money transfer and the other is the business solutions division that takes care of the business-to-business remittances and mainly plays in the small and medium enterprises (SME) business.
Agiasotis said currently they are reviewing the norms and are yet to chalk out the details of the application process. "We will be looking at whether it is valuable for Western Union as a whole or the business division of Western Union and decide how we progress on that. That is something we are looking at. At this stage it is probably most relevant for business solutions."
He added they have appointed a team in place to go through the details of the draft regulations. Other players, who have expressed interest in applying for payments banks, have said the profitability of the bank will be a key challenge.
Western Union is a significant player in the remittances business in India. In the last calendar year, $70 billion of remittances had come to India.
Globally, Western Union - that has an asset size close to $10 billion - reported a fall in net income to $193.8 million for the quarter ended June from $198.6 million recorded in the same period of the previous year Revenue rose 1% to $1,405.6 million during the same period.
The total balance sheet size of Western Union at the end of June was at $9,874.6 million. India's contribution to the total revenues is, however, not known.
