Potential Winners From India's Mobile Banking Push

The Indian central bank announced 11 winners in its new push to bring banking services to a large segment of the country’s population for the first time. The 11 companies selected out of 41 applicants will work closely with the Reserve Bank of India to set up “payments banks,” which will rely heavily on mobile and other technology.

What are payments banks?
Although the actual form of these pseudo-banks has yet to be determined, payments banks will likely be a far cry from a typical bank. The banks will be able to accept deposits and remittances, but will not be allowed to lend.

Although technology is expected to play a large role in the payment banks, they must also have a physical presence.

Financial inclusion
The payments bank push is part of India’s financial inclusion initiative. Over half the adult population of India doesn’t currently have a bank account.

“We see this license as an opportunity to promote financial inclusion by providing banking and transaction services to unbanked, under-banked and small businesses,” State Bank of India chairman Arundhati Bhattacharya said.

The winners
With over half the adults in India’s 1.2 billion population as the target customer base, the payments banks could be a huge opportunity for the companies who gained a permit.

Among the winners are India’s two largest mobile carriers, Bharti Airtel Ltd and Vodafone Group PLC VOD’s Vodafone India. Telecom conglomerate Reliance Industries Ltd was also granted a permit.

Vijay Shekhar Sharma was one of the 11 winners as well. Sharma founded mobile payment platform Paytm, which is partly owned by Alibaba Group Holding Ltd BABA.