Fino Payments Bank (Fino) has become the first such entity to get an in-principle approval from the Reserve Bank of India (RBI) to transition into a small finance bank (SFB).
Experts contend that this setback, even if temporary, could put the company at a disadvantage to its competitors in acquiring new customers.
Most public sector banks, flush with deposits now, offer 3-4% interest on savings deposits, while a few private sector banks go up to 6%.
CEO Shashi Arora discusses his roadmap for Airtel Payments Bank with Karan Choudhury.
'The transition from payment banks to SFBs is only permissible for banks not owned by corporate entities.'
Payments banks have urged the Union finance ministry to increase their deposit limit for each account to Rs 5 lakh, according to a source who participated in a meeting, chaired by the Department of Financial Services Secretary M Nagaraju, in New Delhi. At present, they can accept deposits of up to Rs 2 lakh.
Bharti Airtel aims to leverage its 180 million plus digital service customers and its wide presence in rural areas to grow its payment bank business. "We are well placed as we can leverage the 180 million plus customers we have across our digital assets. "We offer a plethora of services such as lucrative interest rates, gift cards, FASTag, telecom recharges, payments and debit cards. "Our large merchant base of more than eight million allows us to drive both engagement and monetisation.
RBI's exercise will take into account standards of governance, the viability of the payment bank (PB) business model, and changes, if any, if needed.
Payments banks are expecting to get the rights to offer small-ticket loans sometime soon, according to an industry source familiar with the matter. The industry has been in talks with the Reserve Bank of India (RBI) for some time in seeking lending rights.
Kotak Mahindra Bank to have a 19.9% stake in the proposed banking venture.
Priyadarshini Maji evaluates the impact that payment banks are likely to have on your financial life.
Currently, only three have completed more than six months of operation in the space - Fino Payments Bank, Airtel Payments Bank and Paytm
While payments banks surely lose money, their operating ratios were looking better in 2017-18 compared to the year before. This implies that as customer volumes start picking up, the business models may perk up too, says R Jagannathan.
Telenor Financial Services, IDFC Bank and Sun Pharma's Dilip Shanghvi have decided to withdraw their licence to set up a payments bank.
Many users did not know that their entitlement was not coming to their regular bank account but going to an account which they had not applied for.
Bharti Airtel sees opportunity in raising tariff for data services as it feels that rich are paying less and poor are not required to pay anymore, a senior official of the company said. During the company's earnings call for the first quarter of the current fiscal, Bharti Airtel vice-chairman and MD Gopal Vittal said that the company has written to the government for a relief on adjusted gross revenue and has demanded that it should be given benefit at par with other telecom operator, without naming Vodafone Idea.
India's third-largest telecom operator Vodafone Idea (Vi) has secured a 10-year breather on adjusted gross revenue (AGR) payments from the Department of Telecommunications (DoT). This is expected to ease pressure on its balance sheet and enable the company to raise bank debt for capital expenditure.
It will carry out most banking operations like accepting deposits but can't advance loans or issue credit cards.
Telecom firm Bharti Airtel will approach the government on the adjusted gross revenue (AGR) it has to pay the exchequer following the Supreme Court's judgment that the government can reassess all AGR dues, according to vice-chairman and managing director Gopal Vittal.
Non-resident individuals (NRIs) have also been allowed to apply for the niche banking licence, provided they plan to return to India.
Telecoms investor Aditya Birla Nuvo Ltd and retailer Future Group were among the first big names to apply for licenses to run so-called payments banks
A total of 41 companies had applied for the permit
Jaitley said banking network is expanding hugely and the health of banks reflects on the challenges for the economy.
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Of the 11 licence holders, only eight remain in the fray as concerns about profitability and rising competition are making them think twice before jumping in.
The board is likely to take up the matter this month.
In August, RBI allowed 11 business houses to start a payments bank.
Regulators will need to allow the model to evolve to allow profits to flow, says Una Gulani.
Payment banks may not be viable option to attain financial inclusion.
The Department of Posts was one of the 11 entities to get the in-principle nod from the Reserve Bank of India in 2015 for setting up a payments bank.
The company will transfer its wallet business, which has over 218 million mobile wallet users, to the newly incorporated entity -- PPBL -- under the payments bank licence awarded to Vijay Shekhar Sharma, the founder of One97 Communications that owns Paytm.
Last August, RBI gave in-principle approval to 11 applicants.
Last year, the software giant launched a cloud adoption programme for SMBs.
The payments banks are intended to house transactional accounts for individuals, focusing on payments and remittances.
On government's last week's announcement of revamping of PSU banks, Fitch Ratings said the move is "credit positive, but risks remain".
In the backdrop of the crisis brewing at Paytm Payments Bank, major fintech companies are ramping up their workforce and inducting new faces in their leadership teams, industry sources said on Wednesday. Users will not be able to add funds to their Paytm Payments Bank Wallet after February 29, though they will still be able to use the services and the existing balance in the wallets, according to the Reserve Bank of India (RBI) diktat. Industry sources said that competitors to Paytm are investing heavily in offline payments while doubling their salesforce.
According to sources, the postal bank will tie up with other banks and financial companies to offer products like loans, mutual funds, and insurance policies to its customers.
This is the second instance of mainstream banks blocking services to new-age digital payments companies.
Telecom operator Bharti Airtel's CEO has warned customers about rising cases of cyber-frauds, citing a recent instance of a fraudster who posed as company executive and under the guise of updating KYC form, tricked a user into revealing bank details to transfer large amount from the bank account. In an email outreach to subscribers, Gopal Vittal, CEO of Airtel urged users to be vigilant against such cases of cyber fraud that are becoming "alarmingly frequent". Vittal spoke of a recent case where a cyber-fraudster posing as company executive called up an Airtel customer on the pretext of updating his Know Your Customer (KYC) form, tricked him into revealing his bank details and transferred a large sum of money from his bank account.
Tata Sons Ltd, the holding company of the $150 billion Tata group, may be forced to infuse fresh capital into its loss-making telecom arm, Tata Teleservices Ltd (TTSL). This is because TTSL has to pay Rs 19,256 crore adjusted gross revenue (AGR) along with other dues to the central government by March 2026.
Airtel CEO Gopal Vittal on Thursday warned about a rise in cyber frauds amid a massive surge in online transactions during the second wave of the pandemic, and asserted the company is working "relentlessly" and coming out with safety features to ensure customers are not vulnerable to fraudsters. In an e-mail outreach to customers, Vittal highlighted the modus operandi being adopted by fraudsters and also drew attention to cyber frauds related to digital payments. "With the growing second wave of the pandemic and lockdowns in various parts of the country, there has been a massive increase in online transactions. "Unfortunately, there has also been a corresponding increase in cyber fraud," Vittal said.
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