Murugappa Group's Cholamandalam Investment applies for payment bank licence

The payments bank will initially be a wholly-owned subsidieary, but will later look at partners to bring technology or customers

The Murugappa Group NBFC arm Cholamandalam Investment and Finance has applied for payments bank licence with the Reserve Bank of India (RBI). The company has said it would rope in a partner once it gets licence.

Vellayan Subbiah, managing director of Cholamandalam Investment & Finance, has confirmed Business Standard Cholamandalam Investment had applied for the payments bank licence.

Subbiah said that to start with, the payments bank will be a 100 per cent subsidiary of the company, whereas, going forward the company would look at roping in a partner who can bring technology or access to wide customers.

He said the company’s payments bank will have pan-India presence.

Subbiah added the new subsidiary would first tap around three million potential customers who are part of the Murugappa Group ecosystem.

The proposed payments bank will work towards extending RBI’s mandate of financial inclusion, which is an integral part and primary focus for Cholamandalam Investment.

“...naturally people who do the most financial inclusion in the country are the NBFCs. Given our natural position as NBFC, we see a lot of opportunity,” said Subbiah.

The new subsidiary will have a separate management and like any start-up, the initial challenge would be recruitment, said Subbiah.

But given the track record of the brand and the Group, he said the company did not consider it to be a major challenge.

Subbiah said that since it was a longer path to profitability, the new subsidiary should stay focussed.

Cholamandalam Investment reported a 21 per cent in profit after tax at Rs.111 crore during the quarter ended December 31, 2014 as against Rs 92 crore, a year ago.

Disbursements of the Company for the quarter dropped marginally to Rs 3,082 crore from Rs 3,336 crore, a year ago.

Murugappa Group has 28 businesses, including 10 listed companies, with interests in abrasives, auto components, transmission systems, cycles, sugar, farm inputs, fertilisers, plantations, and bio-products, among others