RIL teams up with SBI for payments bank

Looking to foray into banking business, Reliance Industries has teamed up with state-run behemoth SBI to apply for a payments bank licence.
This would bring together the nation's largest banking network and pan-India telecom and retail setup.
RIL and SBI put in a joint application to the Reserve Bank of India (RBI) to set up a payment bank that can offer services such as remittances and deposits but not loans.
Today was the last date of application.
The nation's largest lender SBI, which being a commercial bank could not apply for a payment bank license, will hold 30 per cent in the joint venture. RIL will be the promoter and hold the balance 70 per cent, the company said in a statement.

"The partnership is in accordance with the guidelines for Payments Bank issued by RBI... This partnership brings together the combined strengths of two of India's Fortune500 corporations committed to making a transformative impact on India's financial inclusion landscape," the statement said.

The payments bank will leverage SBI's nationwide distribution network and risk management capabilities along with the substantial investments made by RIL in its retail and telecom businesses.
"It will deploy state-of-the-art technology, build scalable infrastructure and create extensive branch and business correspondent network in order to provide last-mile access and intuitive user experience to all sections of society," the statement said.

RIL did not disclose the investment or the board composition of the joint venture.
Sources close to RIL said the application was not a step towards setting up of a full-fledged bank as it otherwise would have applied for a banking licence.
RIL has nationwide 4G telecom license and plans to provide telephony and broadband services in all states, 5,000 towns and cities accounting for over 90 per cent of urban India and over 215,000 villages in India. Also, through 2,300 retail stores across 166 cities its retail venture touches more than 10 lakhs customers a day.
SBI, which has 15,869 branches and 43,515 ATMs, has tied up with over 45,487 business correspondents.

The payments bank would leverage reach, existing customer and Agent base, expertise and knowledge of the two partners, in order to build a pan India payments and banking business for both consumers and small businesses.
Sources said the payments bank will be an independent board managed company with an arm's length relationship with both RIL and SBI.
A professional and competent team will be recruited by the Board. The Board will also ensure that the payments bank is compliant with all RBI regulations and the laws. The Payments Bank however can draw upon the expertise of SBI and RIL as and when the need arises.