Airtel launches payments bank

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Airtel Payments Bank’s customers will get interest at a rate of 7.25% on deposits, the company said in a statement. (Reuters)

After running pilot programmes in Rajasthan, Andhra Pradesh and Telangana, Bharti Enterprises on Thursday rolled out Airtel Payments Bank services across the country. The company said it will be investing R3,000 crore to develop a pan-India banking network and digital payment ecosystem.

Announcing the launch, Sunil Bharti Mittal, chairman of Bharti Enterprises, said, “Airtel has been at the forefront of digital transformation and has empowered over 260 million customers with affordable telecom services. With Airtel Payments Bank, we are starting another important chapter in our journey.”

“Airtel Payments Bank aims to take digital banking service to the unbanked over their mobile phones in a quick and efficient manner,” Mittal said. He also said during the pilot phase, 25,000 banking accounts were added every day. “Today after the official rollout, the aim is to add 100,000 accounts every day and the target is to have 100 million accounts.”

Speaking at the launch, finance minister Arun Jaitley said, “India is skipping the credit card revolution thanks to technology which costs less. The idea is to reduce dependency on cash as we move towards a cashless economy.”

As for the ownership structure, while Airtel owns 80% equity, the rest is owned by Kotak Mahindra Bank. According to Mittal, the company will follow the guidelines set up by the Reserve Bank of India (RBI) and will bring down its stake to 40%. “We will bring in strategic or financial partners at some point in time by offloading 15-20% stake. Additionally, a few key employees will be given stock options.”.

Uday Kotak, executive vice-chairman and MD, Kotak Mahindra Bank, said, “In future, we will introduce financial offering like loans, etc.”

The company has opened 600,000 Airtel touch points stores across 29 states which will also act as banking points. Starting Thursday, users of the My Airtel mobile application will have the option to migrate from the digital wallet to a bank account by filling e-KYC details through Aadhar.

To begin with, the customer’s mobile number will be his/her bank account number. An interest rate of 7.25% will be paid on deposits in savings accounts. Airtel will also provide free personal accidental insurance of R1 lakh to every savings account user. Moreover, it is giving one minute of Airtel mobile talk time for every rupee deposited at the time of opening a savings account.

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Shashi Arora, MD and CEO, Airtel Payments Bank, said the company already has a million customers. “We have a strong base of 260 million customers using Airtel’s telecom service. This is a huge number and we are expecting a large number of people to join the payments bank.”

This article was sourced from http://newszuma.com