03 June 2016

About 6-7 licensees will end up setting up payments banks: Nandan Nilekani

Infosys co-founder and former UIDAI chairman Nandan Nilekani feels that only about 6-7 of the 11 licensees will actually end up setting up payments banks , while others will struggle and drop out due to underlying challenges with business models around payments banks. 

Nilekani, who recently co-authored the book Rebooting India with Julia Computing co-founder Viral Shah, said that the major telcos including Vodafone, Airtel and India will most probably go ahead with their plans to set up payments banks. 

"So Reliance, Airtel, Vodafone and Idea will be there. PayTM will be there, India Post is there which makes it six. These six are more or less confirmed, three have walked out. FINO (PayTech) will be there because it is in payments. And NSDL you have to ask them," said Nilekani on the sidelines of the launch of trucking network startup Fortigo, which counts him as an investor. 

Last week, IT services firm Tech Mahindra said it was dropping its plans to start a payment bank as the increasing aggression in the business would have eroded its margin potential. 

TechM become the third license winner to pull out of the business. Sun Pharma promoter Dilip Shanghvi and Cholamandalam Investment and Finance Co. had already announced that they would not be setting up the bank. 

The RBI had initially received 41 applications to start a payment bank in February 2015 and issued 11 final in-principle licences in August. 

Nilekani said companies which are in the distributions and collections space would find it a more natural progression to set up payments banks. 

"For PayTM, it's a logical progression from the Wallet to payments. FINO is from BCs (business correspondents) to payments and for the mobile companies they have distribution and they collect recharges. Wherever there is collection, I think it works," said Nilekani who has over the past 12 months become an active angel investor in startups such as Team Indus, Sedemac Mechatronics and Systemantics. 

Source:-The Times of India

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