Big Business in Financial Inclusion

RBI has granted Payment Bank licences to 11 companies. Why they made the cut and what challenges will they face in reaching out to the unbanked

APPLICANT	STRENGTHS	OPPORTUNITIES	CHALLENGES
Aditya Birla Nuvo	Promoted by oldest & largest biz group	Adds to fin capability of insurance, MF, broking, lending	Yet to establish capability in reaching out to financially excluded
Airtel M Commerce	Large pool of mobile users and Airtel Money customers, tie-up with Kotak Bank	Convert mobile users into banking customers; upgrade Airtel Money infra; extend loans via Kotak Bank	Two rival telcos also have payment bank licence. Banking partner has relatively small network
Cholamandalam Distribution	115- year old conglomerate, present in 28 business and 11 listed companies	Can convert 7.5 lakh customers to accountholders and 534 branches into customer touchpoints	Network concentrated in South India; bank penetration much higher in South India
Department of Posts	1.55 lakh post offices with close to five lakh employees	Employees experienced in fin services; postmen can be business correspondents; boost for ambitions to become logistics organization for ecommerce	Most post offices are not networked; customers will expect unified service on small savings although payment banks will be distinct entity
Fino PayTec	Company set up with an objective to use technology for financial inclusion	Already provides last-mile reach to banks in rural areas; pioneer in using tech for financial inclusion	Does not have scale of some of the other entities that have won a payment bank licence
National Securities Depository Limited	India’s first depository; pioneering use of tech in financial sector	Expertise built up in working as registrar for Adhaar and in eKYC gives strong lead	Potential for conflict of interest as NSDL moves from being a service provider to an industry player
Reliance Industries	Capability to launch mega projects; partnership with SBI; set to launch pan-India 4G network	Rel Jio 4G and dedicated handsets can be used to jointly promote mobility and banking services. SBI can provide backup service	Partner SBI has tapped most potential business areas; seeking tie-up only to reach out to dark spots which might not be profitable
Dilip Shanghvi, IDFC, Uninor	Triumvirate of a wealthy promoter, financial institution and telecom network	With no legacy business, it can be an upstart in pricing	Will face stiff competition from existing players
Vijay Shekhar Sharma	Promoter of Paytm – digital wallet with claims of 10 crore accountholders. Low-cost, asset light model	Company is already focused on transactions. Has a large customer base and is well poised to address inclusion agenda	Most customers are with basic KYC. Absence of physical presence will make KYC exercise a challenge
Tech Mahindra	Tech giant’s solutions include products on digital payments, branchless banking	As an IT service provider, has access to cutting edge tech which will enable low cost transactions	No distribution network; conflict of interest as service provider turns competitor
Vodafone Mpesa	Globally developed and tested mobile money model for financial inclusion	Large mobile user base & existing mPesa customers gives it a headstart among rivals	Yet to finalize a bank partner for extending loans; mPesa customers have mobile account with ICICI Bank

Source: Times of India