RBI Deputy Governor welcomes Airtel, KMB tie-up

Mumbai: Welcoming the tie-up between country's largest mobile telephony player Bharati Airtel and Kotak Mahindra Bank for a payments bank, Reserve Bank of India deputy governor H R Khan has said such partnerships are crucial
rbi deputy governor welcomes airtel kmb tie up -...
PTI 30 Jan 2015, 01:29 PM IST

Mumbai: Welcoming the tie-up between country's largest mobile telephony player Bharati Airtel and Kotak Mahindra Bank for a payments bank, Reserve Bank of India deputy governor H R Khan has said such partnerships are crucial for the success of differentiated banks.

“If they have cost effective framework, use mobile and telco network, then they (small finance banks and payments banks) can be successful, otherwise the space is becoming rather overcrowded (with commercial banks),” Khan said, addressing an event organised by ETNow last evening.

The deputy governor also welcomed the deal between Airtel and KMB, saying the RBI has been pushing for such tie-ups for long.

“We have been trying for tie-ups for quite some time, not many experiments have really fructified but one should be encouraged by this initiative. The commercial viability and the business proposition of banks, if married to distribution and technology of telcos, can work wonders for financial inclusion,” Khan told reporters.

With speculation that a host of telcos, including the state-run BSNL, Vodafone and Telenor are interested in entering the differentiated banking fray, Khan also hinted that more such tie-ups might be in the works.

“I presume so. I am hopeful and the buzz I get is that quite a few people are excited both for the PB and SFB,” he said, when asked about other partnerships.

Under the KMB and Airtel tie-up announced yesterday, the banking entity will have 19.90 per cent stake in the payments bank, once it is granted the licence.

The RBI kick-started the process of `differentiated banking' with the release of the final guidelines for small finance banks and payments banks. The last day for applying for interested parties has been extended till February 2 and the RBI has promised to eventually grant licenses “on tap.”

The Payment Banks are aimed at encouraging savings and help with the remittances, while the Small Finance Banks will be small-ticket lending in a smaller area of operation.

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