Energy-to-telecom conglomerate Reliance Industries and India's largest lender SBI have signed shareholders agreements to set up small deposit-taking institutions, called payments bank.
RIL-SBI combine was among the 11 entities that were in August last year given licence by the Reserve Bank of India (RBI) to start a payments bank. Two of these -- Cholamandalam Investment and Finance Co and grouping of Sun Pharma promoter Dilip Shangvi, IDFC Bank and telecom operator Telenor decided to shelve plans of launching payments bank.
"The Subscription and Shareholders' Agreement was signed by RIL as promoter with a 70 per cent equity contribution and SBI as joint venture with a 30 per cent equity contribution on June 30, 2016," the Mukesh Ambani-run firm said in a stock exchange filing.
Payments banks can accept deposits (initially up to Rs 1 lakh per individual), offer Internet banking, facilitate money transfers and sell insurance and mutual funds by piggy-backing on existing retail or other networks. Besides, they can issue ATM/debit cards, but not credit cards.
However, they are not allowed to lend. Instead, they must invest 75 per cent of deposits in short-term government bonds and provide a physical network of access points, one quarter of which must be in rural areas.
"By combining RIL's technology, last mile reach and distribution through RIL's telecom and retail initiatives and SBI banking expertise in offering financial services to millions of retails customers and small enterprises across the country," the filing said.
Mobile phone carriers, retailers and prepaid payment card issuers are among those who have been granted payment bank license last year. Airtel M Commerce Services Ltd, Aditya Birla Nuvo, Vodafone m-pesa, Tech Mahindra and Department of Posts are mong those who won RBI approval to set up such niche banks.
