Reliance joins list of hopefuls for Indian bank permits (updated)

IDFC

02/02/2015 14:11

(Recasts, adds more applicant names) 
    By Devidutta Tripathy 
    MUMBAI, Feb 2 (Reuters) - Indian energy-to-telecoms 
conglomerate Reliance Industries  RELI.NS  on Monday joined a 
list of companies applying to set up a banking network in India, 
under a new structure the government hopes will extend basic 
banking to millions. 
    Reliance, controlled by India's richest man, Mukesh Ambani, 
said it would join forces with India's largest bank, State Bank 
of India  SBI.NS  if it is granted a licence to run a network of 
so-called payments banks. 
    These banks gather deposits and promote non-cash payments in 
a country that still largely depends on cash. But they will not 
lend.  ID:nL4N0VC447  
    The aim is for payments banks to piggy-back on existing 
retail or other networks. 
    "This creates an opportunity," Shinjini Kumar, an executive 
director at consultants PwC in Mumbai, said. 
    "It's more like what happened to telecoms or what happened 
to (fast-moving consumer goods) in the last 15-20 years: they 
cracked the code of catering to the masses." 
    Despite having more than three-dozen commercial banks, not 
counting the Indian operations of foreign lenders and local 
co-operative banks, banking penetration in a country of 1.25 
billion lags many developing countries. 
    According to research commissioned by the Bill & Melinda 
Gates Foundation, only 47 percent of Indian adults had a bank 
account as of 2013-14, of which 25 percent were active.  
    Those figures predate a financial inclusion drive launched 
by Prime Minister Narendra Modi last September that has exceeded 
its target, with 125 million new accounts opened.  
    The Reserve Bank of India handed out two permits for 
full-service banks last year in the first licensing process in a 
decade. This time it had called for applications for two 
categories: payments banks, aimed at the unbanked population, 
and small finance banks. 
  <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 
 Corner shops, mobile phones for bank revolution  ID:nL6N0V01LT  
    Financial inclusion graph http://reut.rs/14ZLgru  
  ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> 
    Mobile phone carriers, retailers, prepaid payment card 
issuers were among those allowed to apply for payment bank 
permits. 
    Top telecommunications carrier Bharti Airtel Ltd  BRTI.NS , 
which had previously said it would partner with Kotak Mahindra 
Bank  KTKM.NS , confirmed on Monday it had applied.  
    Among other phone carriers, Vodafone Group Plc's  VOD.L  
Indian arm also applied for a payments bank licence, people with 
direct knowledge said.  
    Aditya Birla Group's Idea Cellular  IDEA.NS , the 
third-biggest cellular carrier, also applied in a partnership 
with its top shareholder.  ID:nL4N0VC3AG  
    Future Group, one of India's biggest retailers, said 
separately it was also in line for a payments bank permit. 
Infrastructure lender IDFC Ltd  IDFC.NS , which was one of two 
companies granted bank permits last year, said it could pick up 
a small equity stake in Future's payments bank. 
    The Reserve Bank of India did not release a list of 
applicants or a timeline for responses. 
 
 (Additional reporting by Nivedita Bhattacharjee; Editing by 
Clara Ferreira Marques and Jane Merriman) 
 ((devidutta.tripathy@thomsonreuters.com; +91 84518 40430; 
Reuters Messaging: 
devidutta.tripathy.thomsonreuters.com@reuters.net)) 
 
Keywords: INDIA BANKING/LICENCE