Bharti Airtel, world's third-largest mobile phone operator, has become the first telecom group to launch banking operations in India. In the last week, over 260 million mobile phone users were able to open savings accounts at the company's stores and use their phones to deposit and withdraw cash. The Airtel Payments Bank aims to take digital banking services to the unbanked over their mobile phones.
"Just like mobile telephony leapfrogged traditional telecom networks to take affordable telecom services deep into the country, Airtel Payments Bank aims to take digital banking services to the unbanked over their mobile phones," said Sunil Bharti Mittal, chairman of parent group Bharti Enterprises. "Millions of Indians in rural areas will get their first formal banking experience." Just last year, India's central bank had introduced rules to allow supermarket chains, fintech groups and mobile phone operators to launch the "payments banks", with an intention to include the public more in a patchy banking system.
Such banks can accept deposits up to Rs 100,000 and have to invest 75 per cent of the total in government securities. Rules also dictate that they cannot lend money. Finance Minister Arun Jaitley, who launched the bank along with Mittal, believes payments banks are crucial to the economy, especially now after 86 per cent of the country's currency was removed from circulation in November last year. "Paper currency is a currency that has no history or name attached to it. For telecommunication companies and other companies to get into this business is natural," he said.
Several companies including Vodafone India, and Reliance Industries have received licensed for payment banks from the Reserve Bank of India. Mobile phone wallet Paytm, which boasts of over 160m users, is expected to launch its payments bank next month.
