ABNL partners with Idea Cellular to venture into Payments Bank

Aditya Birla Nuvo Limited (“ABNL”) said that it has submitted an application to the Reserve Bank of India (RBI) for obtaining the license for setting-up “Payments Bank“. As per the proposed structure, ABNL will be the promoter of Payments Bank holding 51% equity capital. Idea Cellular Limited (“Idea”), an Aditya Birla Group company where ABNL is largest promoter shareholder, will be holding balance 49% equity capital.

The Board of Directors of ABNL have also approved that equity participation of Idea may be increased up to 60%, if permitted from time to time with approval of regulatory bodies as applicable, the company informed the Bombay Stock Exchange (BSE).

On November 27, 2014, RBI had released Guidelines for Licensing of Payments Banks. The guidelines will help mobile firms and supermarket chains to enter the banking arena so that they can cater to the needs of individuals and small businesses. The objectives of establishing payments banks is to supplement the financial inclusion by providing small savings accounts and payments/remittance services to migrant labour workforce, low-income households, small businesses, other un-organised sector entities and other users.

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Guidelines

Existing non-bank Pre-paid Payment Instrument (PPI) issuers; and other entities such as individuals / professionals; non-banking finance companies (NBFCs), corporate business correspondents (BCs), mobile telephone companies, supermarket chains, companies, real sector cooperatives are promoters who can apply to set up payments banks Receiving of demand deposits -Payments Bank will initially be restricted to holding a maximum balance of Rs. 100,000 per individual customer. A promoter can have a joint venture with an existent scheduled commercial bank to set up a payments bank, as per RBI norms. Issue of ATM/debit cards- Payments Banks, however, cannot issue credit cards, payments and remittance services through various channels.

Also read : Airtel to apply for Payments Bank License

A promoter can have a joint venture with an existent scheduled commercial bank to set up a payments bank, as per RBI norms. Issue of ATM/debit cards- Payments Banks, however, cannot issue credit cards, payments and remittance services through various channels.
The payments bank cannot take on lending activities according to RBI.

There will be a requirement to invest minimum 75 per cent of its “demand deposit balances” in Statutory Liquidity Ratio(SLR) apart from amounts maintained as Cash Reserve Ratio (CRR) with the Reserve Bank on its outside demand and time liabilities,  according to RBI.

The minimum paid-up equity capital for payments banks shall be Rs. 100 crore.

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