Biggies Ambanis, Birlas, Mittals join race for 'small' banks

Big corporates like RIL, Aditya Birla, Airtel and Future groups are among at least a dozen entities that have sought licence from RBI to set up payment or small finance banks, two niche banking models introduced to push financial inclusion and saving habits.
The deadline for submitting the applications with RBI for such licenses ended today and a final call on these would be taken by the central bank in due course.
To foray into banking business through payments banks route, Mukesh Ambani-led Reliance Industries has managed a sort of coup by partnering banking behemoth SBI, the only state-run entity in the fray.

Bharti Airtel has signed on private sector lender Kotak Mahindra Bank as a partner for its own payments bank, while Kishore Biyani-led Future Group has teamed up with IDFC, which was given full-fledged banking licence in April last year but is yet to make that venture operational.
Those having applied for setting up small finance banks include micro-lender SKS Microfinance, brokerage firm India Infoline, remittance provider UAE Exchange, home loan provider Dewan Housing Finance and SE Investments.
The applicants for payments bank category also include Fino Paytech and Vakrangee, while sources said that there are some more entities in the fray including telecom giant Vodafone.

Some of the applicants, including Aditya Birla Group, India Infoline and UAE Exchange had also applied for full-fledged banking licenses to RBI in 2013, but their applications failed to pass the muster.

Kumar Mangalam Birla-led Group has made its fresh application through AV Birla Aditya Birla Nuvo Ltd (ABNL), in partnership with its telecom venture Idea Cellular.
The exact number of applicants in both the categories is yet to be made public by the RBI.
Payment banks would be allowed payments and remittance services through various channels. However, such lenders, cannot issue credit cards or undertake lending activities.
Small finance bank will primarily undertake basic banking activities of acceptance of deposits and lending to unserved and under-served sections.

Last year, RBI issued license to IDFC and Bandhan to set up full-fledged banks in first licenses, while initially 26 entities had applied including Tata group, Reliance Group, L&T and Bajaj among others.