Big Indian Business Houses  To Control Banking Sector Soon?

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India being one of the fastest growing countries in the world, attracts colossal amounts of  FDIs, FIIs and some of the largest corporate houses to make investments here. In order to manage the prevailing market conditions,  the Reserve Bank of India (RBI) recently came up with a proposal to broaden the payment system of India through setting up new banks all across the country. Some of the largest Indian business giants have shown interest to make the most of this opportunity.

As per reports, Aditya Birla Nuvo Ltd, Reliance Industries Ltd (RIL) and Future Group have shown their interest in RBI’s initiative to set up payment banks across India. All the interested parties were asked to submit their proposals by Monday. The first big name that announced its participation in the payment bank plan was Bharti Airtel, which revealed its intentions last Thursday. As per the reports, it has given carte blanche to enter into a partnership with Kotak Mahindra Bank for the same.

On the other hand, Reliance Industries Ltd. on Monday announced that it would associate with the State Bank of India to initiate the payment bank. RIL will be the promoter, while the SBI will act as a joint venture partner with total equity investment of around 30%. RIL stated, “The payment bank will use SBI’s risk management capabilities and national wide network along with the capital investment made by RIL in its telecom and retail businesses.

While the payment banks would not be able to lend money to customers,  there are several other advantages of these banks, due to which the corporate giants have decided to enter the banking field.

It’s the first time when RBI has proposed something like a payment bank concept, and it wants to leave nothing to chance. All the entities will initially be allowed to hold a maximum cash balance of one lakh rupees per customer. They will issue debit cards and other prepaid payment instruments to their customers, but not the credit cards.

Future Group has said that the proposed payment bank will be a separate entity. “The newly proposed  NuFuture Payments Bank will work as a separate entity if it fulfills all the regulatory requirements,” the firm stated in a statement.

Aditya Birla Nuvo, the last participant in the payment bank proposal also stated that it had submitted an application to RBI on February 2, 2015 for obtaining payment bank license. As per reports, ABNL will act as the promoter of the bank with 51 percent stake, while Idea Cellular Ltd will own the remaining 49% stake in the bank.

Even though the proposals have been submitted by these corporate houses, a panel of industry experts will hand over the shortlisted names to RBI. The Central Bank of India is expected to announce the final names very soon. Once the licenses for payment banks are granted, the competition in the banking industry is going to increase, which will undoubtedly favor the customers in a long run.

Bhupendra Sharma

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