Tech Mahindra Withdraws Plans Of Payment Banks
The Information Technology services firm Tech Mahindra on Tuesday announced to drop the plans of payment banks. With the announcement, the company has became the third company to withdraw plans to start a payments bank.
Earlier, Cholamandalam and the Dilip Shanghvi-IDFC Bank-Telenor Financial Services combine had announced that they were pulling out of the payments bank venture.
“With reference to the earlier communication dated August 20, 2015, about the in-principle approval granted by RBI for setting up a payments bank, Board of Directors of the company have decided that the company will not pursue this opportunity,” Tech Mahindra said in a filing to the stock exchange.
The company has partnered with Mahindra Finance for this venture and had said they would be ready by October-November this year. “A well thought through analysis, including business viability, ecosystem leverage and market crowding – all of which makes the project unfeasible for the company at this stage”, the company said in an official statement.
The Reserve Bank of India had given an in-principle licence to 11 players in 2015. After the exit of three, those still in play are a Reliance Industries-State Bank of India combine; Aditya Birla Nuvo (Idea Cellular), Airtel, Vodafone, Department of Posts, FINO PayTech, National Securities Depository Ltd and Paytm (Vijay Shekhar Sharma).
The central bank has repeatedly expressed its displeasure over players surrendering their licences. RBI Deputy Governor SS Mundra, has hinted at bringing in a system of penalising companies that withdrew after approval. “We would certainly feel a little aggrieved because a lot of effort from the part of the RBI goes into processing these applications. So, having done that, if they don’t materialise, that’s disappointing,” Mundra said.
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