Bharti Airtel seeks to convert Airtel Money into payments bank; Kotak Mahindra to buy 19.9% stake
Airtel M Commerce Services Limited (AMSL), a wholly owned subsidiary of telecom major Bharti Airtel, which runs mobile money services under the brand name Airtel Money, is planning to apply for getting a 'payments' bank licence, it said on Thursday.
This is a new category of small banks that RBI is planning to allow in the country. Paytm, which has a mobile wallet business, is also in the queue to get a licence to operate a payments bank.
Airtel said that is seeking to convert its existing prepaid payment instrument licence into a payments bank licence. If approved, Kotak Mahindra Bank Limited will acquire 19.9 per cent stake in AMSL. It did not share further terms of the proposed deal.
"Kotak's banking expertise coupled with Airtel's strength in telecom will help deliver financial services to millions of unbanked citizens across the country," Gopal Vittal, MD and CEO (India and South Asia), Bharti Airtel, said.
"Bharti Airtel has the technology and physical infrastructure, a well-entrenched distribution network in rural and remote areas of the country and has the largest telecom customer base, coupled with our banking expertise, this clearly is a win-win for both," according to Dipak Gupta, joint managing director, Kotak Mahindra Bank.
Airtel Money was the first mobile-based pre-paid payment instrument service in the country. Bharti Airtel has a subscriber base of 215 million through a distribution network of over 1.4 million retail points.
Another player, Oxigen Services India Pvt Ltd, is also applying for the licence.
(Edited by Joby Puthuparampil Johnson)