State-run telecom operator BSNL will be launching its own mobile wallet in the next two months, with State Bank of India (SBI) as its banking partner, reports Times of India. The wallet will allow customers to withdraw money through SBI’s ATMs.
SBI has the largest ATM network in the country with 54,560 ATMs the end of March 2015 (pdf). BSNL could take some comfort in this as it would also help the offline withdrawal of cash feature. Perhaps it should also consider offline methods of loading cash into its wallet as in the case of Mobikwik and ICICI Bank. Currently, Mobikwik wallet users can load cash at any ICICI Bank branches in the Delhi-NCR region and the company said that it will be extended to other parts of the country.
Why the bank partnership?
It’s worth noting that BSNL does not have a prepaid payments instruments license from the Reserve Bank of India to run a digital wallet; the partnership SBI means that it won’t need a wallet license, but the wallet will be subject to scrutiny from the Reserve Bank of India. It’s not the first time that such a deal has happened, and banks such as RBL Bank and DCB Bank have been tying up with other wallet operators and payment companies.
The connection with banks also allows the payment companies to store the funds in an escrow account with the bank which can be moved to different merchants’ and beneficiaries’ bank accounts. The funds which are stored in escrow also allow customers to take back their money stored in the wallets to their respective bank accounts if they cannot find use cases for it.
SBI and payments partnerships
BSNL seems to be trying to play catch up with other telecom operators in the digital payments front but it has applied for a payments bank licence too with the RBI. However, SBI has jointly applied with Reliance Industries Limited (RIL). For the payments bank licence, SBI has formed a joint venture with RIL with 30% stake in the company.
Note that earlier in 2011, Airtel and SBI had come together to form a joint venture for financial inclusion but the partnership fell through after the Reserve Bank of India expressed its apprehension and said it was felt allowing a telecom player a JV with a bank may lead to the back-door entry of a non-banking entity in banking.