India’s richest man Mukesh Ambani has forayed into the banking business with a payments bank. Jio Payments Bank Ltd., a 70-30 joint venture between Ambani’s Reliance Industries Ltd. and India’s largest lender State Bank of India, commenced operations from today, the Reserve Bank of India said in a statement.
Reliance had first received in-principle approval from RBI to open a payments bank in August 2015, along with ten other applicants. It received the licence to operate in March last year.
Ambani is betting on the 4G-enabled feature phone, that his upstart Jio Infocomm Ltd. launched last year, to drive transactions at payments bank. The JioPhone, which has since become India’s top selling feature phone, allows users to link the device for UPI-based payments and other banking transactions. Reliance had earlier planned to launch its banking services alongside deliveries of JioPhone in October last year.
RBI had introduced payments banks to provide low-cost banking services to improve financial inclusion. They can accept deposits up to Rs 1 lakh, issue debit cards but are not allowed to offer loans.
Jio’s telecom rival Bharti Airtel was the first to launch a payments bank in November 2016. Since then, Vijay Shekhar Sharma-led Paytm, Aditya Birla Group, and ICICI Bank-backed FINO have all started payment banking operations. The Department of Posts, which also received licence for a payments bank, is yet to start its services fully and is running pilot branches.