Mahindra Finance eyes 50% stake in payments bank

Tech Mahindra, a subsidiary of Mahindra & Mahindra, has applied to RBI for a permit to set up a payments bank

Mahindra Finance is likely to hold up to 50 per cent stake in the proposed payments bank, for which a group entity has applied for a licence from  the Reserve Bank of India (RBI).

Tech Mahindra, a subsidiary of Mahindra & Mahindra, has applied to RBI for a permit to set up a payments bank, the licences for which are expected to be granted in the next few months.

“The board has expressed desire for the payment bank. The board resolution says anything up to 50 per cent. No final decision has been taken,” Mahindra Finance Managing Director and Chief Executive Officer Ramesh Iyer told PTI.

Tech Mahindra is among the 41 applicants who are vying for a payments bank licence from RBI. Other big corporates, including Reliance Industries Limited, too, have applied for a licence.

Guidelines for these banks was framed by RBI in November last year.

Payments banks would be allowed payments and remittance services through various channels. However, such lenders, cannot issue credit cards or undertake lending activities.

Such banks will initially be restricted to holding a maximum balance of Rs 1 lakh per individual customer and will be allowed to issue automated teller machine/debit cards.

These banks are aimed at encouraging savings and help with the remittances.