Thomas Cook mulls entry into payment bank route

Tour operator Thomas Cook, also one of the country’s largest foreign exchange dealers, has evinced interest in setting up a payment bank, to grow its financial services business.

In July, the Reserve Bank of India (RBI) had released draft norms for opening of “niche banks”, such as payment banks and small banks. A new idea, as only universal banking licences have been granted till date. A payment bank, suggests the draft norms, will offer remittance services but are barred from offering loans. It can accept a deposit of Rs 100,000 from one account holder and will be eligible for deposit insurance.

However Thomas Cook said it is yet to take a decision on setting up a payment bank. “Thomas Cook India is keen on exploring viable opportunities in the payment space and once final guidelines are received from RBI, we will review the potential, keeping in view our strategic plans,” said Mahesh Iyer, its chief operating officer (foreign exchange).

The central bank is expected to issue final guidelines on payment banks and small banks in a month.

The minimum capital requirement for setting up such an entity had been proposed at Rs 100 crore. RBI had said it would assess the “fit and proper” status of applicants on the basis of past record of sound credentials and integrity, financial soundness and successful record of at least five years in running their businesses.

Thomas Cook has been in India since 1881 and has a national network of own offices, travel stores and franchisees to sell its travel products and foreign exchange. It is engaged in the retail and wholesale forex business, remittances and export of foreign currency notes. Thus, it can leverage both expertise and network for a banking venture.

In its 2013 annual report, Thomas Cook said it handles 1.6 million forex transactions annually and is one of the largest exporters of bank notes globally. Forex contributes about 44 per cent of its stand-alone revenue.

Last year, Fairfax Financial Holdings bought a 73 per cent stake in Thomas Cook India and the company has been looking to grow and diversify its business, both through organic and inorganic routes.

While issuing the proposed norms, RBI had said non-banking  finance companies, mobile operators, and supermarket chains were among those eligible to set up such banks, provided the companies met the apex bank Reserve Bank of India’s governance and share capital criteria.