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Airtel launches India’s first Payments Bank service in Rajasthan

Airtel Payments Bank Limited or Airtel Bank became the first payments bank in the country to launch live banking services in Rajasthan.

The pilot phase of the Airtel bank launched in Rajasthan aims at testing systems and processes ahead of a full scale pan Indian launch.

Key Facts

  • Airtel Payments Bank is a subsidiary of Bharti Airtel Limited. Mahindra Bank holds 19.9% stake in it.
  • Airtel retail outlets across Rajasthan will act as banking points. They offer a range of basic, convenient banking services as per Payments Bank guidelines issued by RBI.
  • Customers can open bank accounts by using Aadhaar based e-KYC. Airtel subscriber’s mobile number will function as a bank account number.
  • The bank will accept deposits not exceeding Rs 1 lakh. It cannot perform lending activities, except while giving loans to its employees on approval of the board.
  • It intends to give an interest rate of 7.25% per annum on deposits in savings accounts.
  • It will be offering customers the convenience of cashless purchase of goods/services using their bank accounts/wallets, contributing to of financial inclusion and banking for all.
  • Though payment banks are allowed to issue debit card facility, but Airtel Payments Bank will be not offering this facility right now.

Background

In August 2015, RBI had had given in-principle approval to 11 applicants to set up payments bank by February 2017. So far, out of these 11 applicants, Tech Mahindra Ltd, Cholamandalam Investment and Finance Co, and billionaire Dilip Shanghvi have opted out.

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TRAI recommends Rs 3,050 crore penalty on Airtel, Vodafone & Idea

Telecom Regulator Telecom Regulatory Authority of India (TRAI) has recommended Department of Telecom (DoT) to impose combined penalty of 3,050 crore rupees on Bharti Airtel, Vodafone and Idea cellular.

It had mentioned that the penalty should be imposed on these telecom companies for allegedly denying interconnectivity to newcomer Reliance Jio.

What is the issue?

  • The Reliance Jio had alleged that due to inadequate interconnection points its subscribers were unable to make calls to other networks.
  • TRAI has found that these three companies have violated licence norms by denying adequate interconnection points to Reliance Jio Infocomm.
  • Their combined actions have stifled the competition and are seen as anti-consumer and against public interest.

Now the DoT will decide on next course of action. If DoT finds violations of norms in all circles as mentioned by TRAI, these three telcos will be imposed combined penalty of Rs 3,050 crore.

About Telecom Regulatory Authority of India (TRAI)

  • The TRAI is an independent regulator of the telecommunications business in India. It came into existence by the Act of the Parliament in 1997.
  • It was established in wake of entry of private sector in telecom industries after Government had constituted the National Telecom Policy (NTP) to attract domestic and FDI investment in the telecommunication sector.
  • Its main purpose is to deliver a fair and transparent environment for fair competition in telecom market. TRAI also fixes or revises the tariffs for telecom services in India.

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RBI gives nod to Bharti Airtel’s payments Bank Unit

The Reserve Bank of India (RBI) has given its in-principle approval to Bharti Airtel’s payments bank venture — Airtel M Commerce Services Ltd (AMCS).

With this AMCS has become the first entity to receive final approval from the RBI to start a payments bank. Airtel M Commerce is a subsidiary of Bharti Airtel, a telecom company.

Private sector lender Kotak Mahindra Bank has upto 19.9 per cent stake in Airtel M Commerce.

Note: The Payments Banks are not allowed to lend. Hence, a tie-up with banks will help them source loans for their customers.

Background

  • In August 2015, RBI had granted in-principle licences to 11 entities to start payments banks.
  • The ‘in-principle’ approval was valid for 18 months, during that time RBI had asked applicants to comply with the licensing norms.
  • Most of the players who received the payments licences are yet to apply for the final licences. One of them Cholamandalam Distribution Services Ltd. has decided not to go ahead with the venture.

Some of the other players that have received such differentiated licences are Tech Mahindra, Vodaphone m-pesa, Reliance Industries, Fino Pay Tech, Vijay Shekhar Sharma, founder of the mobile wallet Paytm and among others.

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