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And then there were eight: Tech Mahindra withdraws its payments bank

broken piggy bank

IT services company Tech Mahindra informed that it will not be pursuing a payments bank, according to a notification on the Bombay Stock Exchange (BSE). So far, Tech Mahindra has not elaborated as to why it is not starting a payments bank and whether it has communicated the same to the Reserve Bank of India. We have written to the company and will update once we hear from them.

Tech Mahindra received an in-principle approval from the Reserve Bank of India (RBI) in August 2015 and was supposed to commence operations in the second half of 2016. RBI had permitted 11 entities to start a payments bank, with this development the list is down to eight.

Note that Tech Mahindra has a prepaid payments instrument (PPI) licence to run a digital wallet called MoboMoney from the RBI. If it had decided to start a payments bank the PPI licence would be merged into the payemtns bank licence.

MoboMoney, uses a near field communication (NFC) tag to pay merchants who have NFC enabled POS’ and other NFC enabled mobile phones.  It supports mobile recharges from Airtel, Vodafone, Idea, Aircel, Reliance, Tata Indicom, BSNL and MTNL, and DTH recharges of Videocon D2H, Tata Sky, Sun Direct and Airtel DTH. It also accepts offline payments in Delhi NCR with merchants who operate cyber cafes, grocery stores, pan shops, medicinal stores, college canteens and stationery stores among others.

Earlier this week, Sun Pharma promoter Dilip Shangvi who had partnered with IDFC Bank and telecom operator Telenor to start a payments bank, surrendered his license. In a joint statement, the three partners said that they would be communicating their decision to the RBI and not pursue a payments bank. It however did not specify a reason for why it would not commence payments bank operations.

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In March this year, Cholamandalam Investment and Finance Company had decided to abandon its plans to set up a payments bank, saying that the decision came from the board  after “considering competition and other factors, including the long gestation period”.

Commencement of operations by other players

So far, three players have announced the date by when they would be starting their payment bank operations. Information and communications minister Ravi Shankar Prasad announced that India Post would be beginning its operations from March 2017, as indicated by this PTI report. Paytm has set a target of August 2016 to commence operations while Airtel will be starting its payments bank operations by the second quarter of this financial year.

Image credit: Flickr user Images Money under CC BY

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