[NEW DELHI] Billionaires Mukesh Ambani and Kumar Mangalam Birla are seeking to set up non-lending banks to tap fees for local remittances, transactions at automated teller machines and mutual fund sales as more Indians open bank accounts.
Reliance Industries Ltd, Aditya Birla Nuvo Ltd and India's second-biggest retail chain Future Retail Ltd were among applicants today.
With payment banks, Prime Minister Narendra Modi aims to tap into savings from rural areas and bolster growth in the world's second-most populated nation. About 99.7 per cent of households now have a bank account, Mr Modi wrote in a Jan 24 letter to bankers.
"Most development activities were hindered by the single disability of not having bank accounts," Mr Modi wrote in the letter.
India's payment banking license will allow companies to collect deposits, facilitate money transfers and sell insurance and mutual funds. Companies are looking at gaining revenue from commissions, said Mukesh Sadana, a financial consultant at Lucknow-based MicroSave Pvt.
State Bank of India, the country's largest lender, will be a venture partner with as much as 30 per cent in Reliance's proposed bank, the Ambani-controlled company said. Idea Cellular Ltd, the telecom business of the Birla group, will hold 49 per cent in the proposed bank, according to its filing.
Bharti Airtel Ltd, India's largest mobile-phone operator, had applied on Jan 29. It plans to sell a 19.9 per cent stake in the bank to Kotak Mahindra Bank Ltd.
All deposits made at these banks will be guaranteed by the Reserve Bank of India, the central bank. Payment banks would have minimum paid-up capital of one billion rupees (US$16.2 million), according to the rules published by the Reserve Bank of India on Nov 27. The promoters will have to contribute at least 40 per cent of the total paid-up capital.