Reliance Industries, Vodafone m-pesa and Airtel M Commerce are among the 11 applicants to receive "in-principle" approval by the Reserve Bank of India (RBI) to open payments banks.
These entities can accept cash deposits, permit remittances and roll out "simple financial products". They can accept savings deposits up to Rs 1 lakh from a customer.
A payments bank is not allowed to lend to customers, like commercial banks.
The 11 entities have to comply with the rules and regulations laid down by the central bank within 18 months, after which the RBI will give them formal licences.
The minimum capital required to set up a payments bank is Rs 100 crore and the banks will have to invest 75% of their funds in government securities.
The latest round will pave the way for bank licences to be issued "on tap".
"Going forward, the Reserve Bank intends to use the learning from this licensing round to appropriately revise the Guidelines and move to giving licences more regularly, that is, virtually 'on tap'," the RBI said in a statement.
Tech Mahindra, which plans to partner with Mahindra Finance, has said that it will initiate the compliance process immediately.
"The company doesn't need 18 months and is ready to start its payments bank business today itself," CP Gurnani, MD & CEO of Tech Mahindra told CNBC-TV18.
Another successful applicant, Fino PayTech, which is backed by private sector lender ICICI Bank, has said the move will deepen banking in the country.
Rishi Gupta, MD & CEO of Fino PayTech, said he is hopeful of breaking even with three years.
As only 26% of the applicants have been allowed to start payments bank services in the current round, the RBI is expected to approve more such entities going forward.
"The Reserve Bank believes that some of the entities who did not qualify in this round, could well be successful in future rounds," the RBI said.
While Reliance Industries will tie up with public sector lender State Bank of India, Airtel M Commerce Services Ltd will partner with Kotak Mahindra Bank, reports Livemint.
Apart from Reliance, Vodafone and Airtel, the following entities have been given approval to open payments banks:
- Department of Posts
- Fino PayTech
- National Securities Depository Limited (NSDL)
- Tech Mahindra
- Aditya Birla Nuvo
- Cholamandalam Distribution Services
- Vijay Sekhar Sharma of PayTM
- Dilip Shanghvi of Sun Pharma