Aditya Birla, Future group apply for payments bank licenses

Aditya Birla Nuvo to own 51% of the bank: IDFC may pick up stake in Future Group's banking arm

Telecoms investor Aditya Birla Nuvo and retailer Future Group were among the first big names to apply for licenses to run payments banks, under rules meant to put basic banking within the reach of hundreds of millions.

Monday is the deadline for applications to run payments banks - which cannot lend - but also for permits to run small finance banks.

Aditya Birla Nuvo, which is the biggest shareholder in India's third-biggest cellular carrier Idea Cellular Ltd, said it plans to own 51% of the bank, while Idea will own the remainder. Idea can later raise its holding to 60%.

Future Group, one of India's biggest retailers, also said it had applied on Monday for a payments bank permit. The group said the banking entity will be called NuFuture Payments Bank.

According to sources, IDFC group is expected to pick up 19.8% stake in the new entity. The proposed payment bank will leverage Future Group’s extensive presence across the country to reach out to depositors.

The group has 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, among others.

"The proposed payment bank will work towards extending the RBI’s mandate of financial inclusion through focusing on Future Group’s core consumer groups that include women, migrant workers, self-employed people as well as farmers and local entrepreneurs from the group's sourcing base," the group said in a statement. 

Payment banks are meant for simple banking transactions. These institutions will not be allowed to lend or accept term deposits. Customers can't keep more than Rs 1 lakh in their account.

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

Indian authorities, including the RBI which will award the licenses, hope the permits will further financial inclusion, in a country where nearly half the population does not have access to formal banking.