Euronet India may apply for payment bank licence

Gets RBI approval to enter remittance market

Payment solutions provider Euronet India plans to approach the Reserve Bank of India (RBI) for a payments bank licence.

“We are in the process of evaluating the guidelines and may apply for a licence after the final norms are out,” said Himanshu Pujara, managing director, Euronet India.

 

Raghuram Rajan, Governor, RBI had said that the guidelines on niche banks are expected by the end of this month.

 

However, for Euronet to apply for a payment bank licence, it will have to set up another company for it, Pujara said. This is because according to existing RBI guidelines, the foreign holding in the bank should be limited to 74 per cent.

 

“In order to have an Indian partner with at least 26 per cent stake, we will have to look at creating another company. We will take a final decision on the process after the final guidelines are out,” he added.

 

Payments banks are allowed to accept deposits and facilitate remittances and payments but cannot lend. They are also expected to offer only demand deposits - current account and savings deposit products and not fixed deposits.

 

In the draft norms for payments banks, RBI has said telecom companies, retailers, pre-paid instrument issuers (PPIs), non-banking financial companies (NBFCs), real estate cooperatives and public sector entities can apply to get a licence to set up payments banks. The minimum paid-up capital for such a bank is required to be Rs 100 crore, of which the promoters' contribution would be at least 40 per cent.

 

Euronet, also a player in the White-label ATM space, is now set to expand its business to the remittance market as well. Reserve Bank of India has granted Euronet the approval to enter into the remittance market in India. Pujara said that currently the company is in the process of entering into tie-ups with banks and other players and will be launching operations by the fourth quarter of this financial year.

 

Globally, Euronet is present in the remittance market through its subsidiary Ria Money Transfer. In 2013, Ria processed approximately 35 million money transfers with a total value of $9 billion  in 135 countries. 

 

Several players are allowed to remit money into India but only a few such as Western Union, UAE Exchange and Money Gram have the cash out facility.

 

According to the World Bank, India remains the leader in receiving remittances and is estimated to receive approximately $71 billion in 2014.