Aditya Birla Group may sell up to 20% in Idea Payments Bank: report
20 Apr 2018
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The Aditya Birla Group is planning to sell a minority stake of up to 20 per cent in Idea Payments Bank to raise about Rs200 crore, which values the bank at Rs1,000 crore, says a report in The Economic Times.
Aditya Birla Nuvo owns 49 per cent stake in the payments bank with Idea Cellular holding the remaining stake.
The report, quoting sources close to the development, said the money will be used to develop the two-month-old business, which is facing teething troubles.
The payments bank is reported to be facing headwinds in setting up and launching operations.
“While the concept of small finance banks has taken off fairly well, the payments bank ecosystem is still reeling under cost pressures,’’ an executive from the industry told the paper.
Idea's payments bank started operations in February after Aditya Birla Idea Payments Bank received licence from the Reserve Bank of India in April 2017. However, the payments bank lacks a clear cut strategy of how to operate a payments bank.
Idea’s rival and market leader Bharti Airtel was the first telecom entity to begin payments bank operations in November 2016.
RBI promoted the idea of payments bank as the model offers services such as small savings accounts, payment or remittance services to migrant labour workforce, low income households, small businesses, unorganised sector entities encouraging users to be more financially inclusive.
While these banks, mainly digital companies, can accept deposits of up to Rs100,000 per customer, they cannot give loans and are not eligible to earn money from interest rates. They also have to invest 75 per cent of their deposits in government bonds with maturity of up to a year
