Reserve Bank of India Governor Raghuram Rajan said, on Tuesday, he is not “overly perturbed” by surrender of Payments Bank licences by some companies but indicated that there could be a mechanism to ensure that entities apply for licences after due diligence as there is a cost involved in vetting them.
Three entities — Tech Mahindra, Cholamandalam Investment and Finance Company and a consortium of Dilip Shanghvi, IDFC Bank and Telenor Financial Services — have decided to back out of the Payments Bank licencing.
“We are not overly perturbed that some people decided after analysis that they would not go forward. In fact it suggests that licencing has been adequately liberal and that we have a variety of players coming in,” he said at a press conference after announcing the second bi-monthly monetary policy for the current financial year.
Last August, RBI gave in-principle approval to 11 applicants including Department of Posts, Aditya Birla Nuvo, Airtel M Commerce Services, Fino PayTech, National Securities Depository, Reliance Industries, Tech Mahindra and Vodafone m-pesa for setting up payments banks.
Rajan said, “We gave out licences to anybody we thought have the appropriate qualifications to run a Payments Bank. We presume that they also analysed potential business prospects. After doing further analysis and seeing the other players who are coming in, some of them decided to back off.
“My sense is that the Payment Bank works particularly well for those who have base of operations and many contact points and therefore can built upon that and the classic example is somebody affiliated with mobile company with many kiosk through which you can do cash in cash out.”
He said however that there is a cost in scrutinising licence applications as lot of information is sought and various government agencies are involved.
“People will decide they will come in or not. People should also acknowledge the fact that it imposes some cost on assessors to go through the application. We ask a lot of information from various government agencies,” he said.