Voda may Sur­ren­der Bank Li­cence

The Economic Times - - Finance & Commodities - Pratik.Bhakta @times­group.com

Mum­bai: One of the ca­su­al­ties of the Idea Cel­lu­lar-Voda­fone In­dia merger could be a pay­ments bank. The merged en­tity could lead to Voda­fone sur­ren­der­ing its pay­ments bank’s in-prin­ci­ple ap­proval as it can­not com­pete with an­other group com­pany Aditya Birla Nuvo which also has a sim­i­lar ap­proval from the Re­serve Bank of In­dia.

In­dus­try in­sid­ers said that since Aditya Birla Nuvo, which owns Idea Cel­lu­lar, also has a banking li­cence, Voda­fone would give up its right af­ter the merger.

“The ma­jor rea­son for Vo- da­fone to sur­ren­der would be its for­eign own­er­ship. Voda­fone In­dia is a whol­ly­owned sub­sidiary of its UK par­ent and to be able to set up a pay­ments bank, it needs to re­duce it to less than 50%, for which they have not an­nounced any do­mes­tic part­ner yet,” said one per­son in know of the mat­ter.

A Voda­fone In­dia spokesper­son, how­ever, said that though they were in talks with the Aditya Birla Group for an all share merger, they were on track to ful­fill their am­bi­tion re­gard­ing a pay­ments bank. The two com­pa­nies, how­ever, have not de­cided on the brand name and the fi­nal terms and con­di­tions. But once they get a com­mon net­work, there’s no rea­son for the merged en­tity to have two li­cences, said in­dus­try ob­servers.

“As of now, the fi­nal de­ci­sion on the merger has not been taken, but the think­ing in Voda­fone is to give up on the li­cence and un­der­take banking op­er­a­tions un­der the Aditya Birla Nuvo li­cence, as they do not have sim­i­lar prob­lems of for­eign share­hold­ing,” said an­other per­son fa­mil­iar with the mat­ter.

Fur­ther, Idea Pay­ments Bank is plan­ning to start banking op­er­a­tions in the first half of this year.

RBI had an­nounced a list of 11 en­ti­ties which were given in-prin­ci­ple nod to set up banking op­er­a­tions within 18 months from Au­gust 19, 2015. Of the 11, while Cho­la­man­dalam Dis­tri­bu­tion Ser­vices, Tech Mahin­dra and Dilip Shanghvi have al­ready given up their li­cences, oth­ers such as Paytm, Air­tel Pay­ments Bank, Fino Paytech, In­dia Post and NSDL have al­ready ap­plied for fi­nal clear­ance to start op­er­a­tions. The RBI had granted li­cences to dif­fer­en­ti­ated banks in 2015 to drive fi­nan­cial in­clu­sion specif­i­cally in places where banks have not been able to set up in­fra­struc­ture. All ma­jor tele­com com­pa­nies were granted li­cences as they con­nect more than a bil­lion mo­bile phones and could of­fer ba­sic banking ser­vices to un­banked In­di­ans.

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