FX Mart only player from Punjab to apply to RBI for payment bank

Punjab-based FX Mart (P) Ltd, a Reserve Bank of India (RBI)-authorised pre-paid instruments (PPI) issuer, has joined the league of Reliance Industries, Vodafone, Airtel and others who have applied for a payments bank licence. FX Money, a division of FX Mart, is currently working in the sector through its domestic remittances network. It has presence in Punjab, Haryana, Delhi, Uttar Pradesh and Bihar, serving financial inclusion in unbanked areas of the country.

A total of 41 companies across the country have applied to RBI for payments bank licences.

Speaking to Business Standard, Amit Narang, managing director and chief executive officer of FX Mart, said, “Last year, RBI had issued licences to IDFC and Bandhan to set up full-fledged banks. A total of 26 entities had applied for this licence, including Tata group, Reliance Group, L&T and Bajaj, among others. Inspired by the Bandhan experience, we also decided to apply to RBI to set up a banking network in India,” said Narang.

“It is assumed those with a PPI licence would be given preference. Some of the major corporate houses who have applied are not PPI holders. Hence, we are hopeful that when the RBI decides to give licences for the purpose, we will get a chance,” said Narang.

Payments banks, with a focus on payments and remittance services, cannot give out loans. These banks also have to deploy deposits in government bonds, while small banks have to confine themselves to small-ticket loans to farmers and small businessmen.

“Since, RBI had said if any company ties up with a bank to offer the service, it will be given preference. We are also exploring options for partnership,” said Narang.

Narang said RBI’s efforts to create a framework for licensing small banks and other differentiated banks would give a major impetus to financial inclusion in the country. The effort is expected to help reduce black money by digitising payments and acting as a catalyst towards a cashless society, said Narang.