Two months after Cholamandalam dropped its plans to float a payments bank, Dilip Shanghvi, IDFC Bank and Telenor Financial Services on Friday said they, too, were not interested in establishing the niche bank either, without giving any reason.
“During the past eight months, representatives of these three partners have worked together to establish relevant frameworks and a governance structure for the proposed joint venture (JV),” a joint statement said.
“Telenor Financial Services and IDFC Bank have rich experience in offering financial services and the intention of the JV was to combine our expertise to launch a robust payments bank service in India. Following the mutual decision to withdraw these plans, the payments bank licence will not be pursued,” said Shanghvi on behalf of Dilip Shanghvi Family & Associates in the statement.
The Reserve Bank of India had given licences to 11 entities on August 19 to float these niche banks that cannot lend, but accept deposits of up to Rs 1 lakh. With Shanghvi-IDFC-Telenor deciding to give back their licence, there will be only nine entities left. These will be Reliance Industries-State Bank of India combine; Aditya Birla Nuvo (Idea Cellular); Airtel; Vodafone; Department of Posts; FINO PayTech; Tech Mahindra; National Securities Depository Ltd; and Paytm (Vijay Shekhar Sharma).
The objective of setting up payments banks was to further financial inclusion. This was to be achieved by providing small savings accounts and payments/remittance services to migrant labour workforce, low-income households, small businesses, etc in this regard.
“From the day we signed the Letter of Intent, we have worked hard together with our partners to form a company, which can meet the demand for basic banking services across India. We are thankful to both IDFC Bank and Dilip Shanghvi for their efforts throughout this process,” said Tine Wollebekk, head of Telenor Financial Services.
“It was a good experience working with Telenor Financial Services and Dilip Shanghvi over the last year. We thank them for their support and look forward to future associations,” said Rajiv Lall, founder and managing director & chief executive officer of IDFC Bank.