Bharti Air­tel, Ko­tak Bank JV Bags Li­cence

Cos can now reach out to more clients while driv­ing fi­nan­cial in­clu­sion

The Economic Times - - Economy & Companies - Our Bu­reau

New Delhi: Bharti Air­tel, In­dia’s largest car­rier, has re­ceived its pay­ments bank li­cence that it had ap­plied for in-part­ner­ship with Ko­tak Mahin­dra Bank, a devel­op­ment that will help com­pa­nies reach out to more cus­tomers while ad­vanc­ing the gov­ern­ment’s fi­nan­cial in­clu­sion drive and gen­er­ate ad­di­tional rev­enue.

“Air­tel M Com­merce Ser­vices Lim­ited (AMSL), a sub­sidiary of Bharti Air­tel Lim­ited, has been granted pay­ments bank li­cence from the Re­serve Bank of In­dia on April 11, 2016,” the Su­nil Mit­tal-founded com­pany told BSE on Mon­day. Air­tel, in fact, be­came the first to re­ceive the for­mal li­cence from the bank among the 11 which were granted in-prin­ci­ple ap­provals in Au­gust 2015.

Pay­ments banks can, typ­i­cally, ac­cept de­posits, con­vey re­mit­tances and make pay­ments to re­cip­i­ents, mak­ing them ideal for mi­grant work­ers who of­ten need to send cash home. They, how­ever, can­not do any lend­ing.

Bharti Air­tel and Ko­tak Mahin­dra had ap­plied for the li­cence through its wholly-owned sub­sidiary AMSL, which launched Air­tel Money back in 2011 and was the first mo­bile-based pre-paid pay­ment in­stru­ment ser­vice in the coun­try. Ko­tak had picked up 19.9% stake in Air­tel M Com­merce, for .₹ 98.4 crore in Fe­bru­ary.

Tel­cos such as Bharti Air­tel and Voda­fone In­dia di­ver­si­fy­ing into the pay­ments banking busi­ness could sig­nif­i­cantly lower their sub­scriber churn as those opt­ing for mo­bile money ser­vices are un­likely to leave in a hurry. Be­sides, the tel­cos could make ex­tra .₹ 1,200-1,500 crore each in rev­enue over three years, say an­a­lysts. For Ko­tak, the new pay­ments bank will help it break new grounds among the un­banked and ex­pand its reach in the huge ru­ral mar­ket. Ko­tak’s banking ex­per­tise will help Air­tel de­liver fi­nan­cial ser­vices to mil­lions of un­banked cit­i­zens across the coun­try.

Air­tel has over 245 mil­lion cus­tomers in In­dia and a rev­enue mar­ket share of 31.4%. AMSL of­fers mo­bile money ser­vices un­der the brand name Air­tel Money, and the com­pany had pro­posed to con­vert the ex­ist­ing pre-paid pay­ment in­stru­ment li­cense into a Pay­ments Bank li­cence.

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