SBI and Airtel have joined hands to form a new company that will offer mobile banking services. The initiative is aimed at financial inclusion of the un-banked population in the country.
Under the new initiative Airtel outlets and retailers will serve as business correspondents (BC) of SBI (State Bank of India) and the bank’s customers will be able to deposit and withdraw money from their accounts at Airtel outlets. They will also be able to transfer this money to others electronically as well from Airtel and SBI outlets. Services in the near future will include loans, insurance, credit cards and purchase transactions.
Mobile banking will be a cloud based service accessible via mobiles, PCs and bank branches (ATMs and BC outlets included). Customers will also be able to use SBI’s network for their banking activities. Airtel has more than 1.5 million retail touch points in rural and semi urban areas, compared to SBI’s 13,000 branches.
Together SBI and Airtel will invest Rs 100 crore in the joint venture. SBI owns 51 per cent of the new company and Airtel owns the remaining 49 per cent. The investment is in addition to infrastructure, which is already in place. SBI will appoint the chief executive officer of the new organisation while the chief operating officer will be from Airtel. While SBI will take care of the banking, Airtel will contribute its distribution and technology.
Customers will be able to transfer money to bank accounts of any bank. They will have to pay a small, as yet unspecified, fee for such a service. They will meanwhile also earn interest on their deposits, though the rate was not announced. O P Bhatt, the charman of State Bank of India, said, “We will charge the customer some amount but it will be nominal; we will focus more on scale rather than high profit from individuals.”
The JV will start operations from March 31 this year, once clearances from the government and RBI (Reserve Bank of India) have been received.
RBI has allowed banks to appoint for-profit companies as business correspondents (BCs). The tie-up Airtel and SBI is possible due to this change in policy.
Sunil Bharti Mittal called the move a game changer. He said, “I have been working on this for the past four years; it has now become possible due to policy change. We will be able to bring financial inclusion and economic empowerment to the masses.”