India’s payment bank drive sees more big name applicants

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Aditya Birla Nuvo, a majority investor in India’s third-biggest cellular carrier Idea Cellular, and retailer Future Group, have applied for licences to run payment banks in India.

Idea Cellular’s biggest shareholder will own 51 per cent of its banking venture at first. But Aditya Birla Nuvo will allow the carrier to raise its holding to 60 per cent at a later date, Business Standard reported.

Future Group, one of India’s biggest retailers, also applied for a payments bank licence on Monday, the deadline for applications. The banking entity will be called NuFuture Payments Bank, and IDFC group is expected to pick up 19.8 per cent stake in the new entity.

Future Group has a physical presence in 168 cities across the country and rural locations in Gujarat and Punjab through its retail networks like Big Bazaar, KB’s, Nilgiris, Big Bazaar Direct and rural distribution network, Aadhaar.

Monday is the deadline for applications for payment bank licences for banks that cannot lend, or accept term deposits, and only allow customers to keep up to Rs 1 lakh in their account. The new banks are intended to offer simple banking services to many of India’s unbanked as part of a government drive to extend the country’s financial services.

Dozens of companies are expected to apply, as the country hopes to use networks of mobile phone vendors, fuel stations and corner stores to extend the reach of the banking system. Top Indian telecommunications carrier Bharti Airtel Ltd has said it would apply.

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