Telcos start groundwork to set up payment banks?

According to RBI draft guidelines, entities eligible to set up a payment bank include existing non-bank PPIs, NBFCs, mobile telephone companies, supermarkets, real sector cooperatives, and public sector entities.

Telecom companies Idea , Vodafone and Airtel are preparing business plans to apply for payment bank licences. In this context, the companies are learnt to have submitted a set of queries to Reserve Bank of India (RBI), sources told CNBC-TV18.

The RBI on Thursday released draft guidelines for licensing of both payments banks and small banks. The entities eligible to set up a payment bank include existing non-bank pre-paid instrument issuers (PPIs), non-banking finance companies (NBFCs), corporate BCs, mobile telephone companies, supermarket chains, companies, real sector cooperatives, and public sector entities.

However, it is learnt that these payment and small bank applicants too have to go through the same screening process that large banks applicants went through, including meeting the 'fit and proper' rules.

According to sources, telcos are awaiting clarity on RBI guidelines on payment banks, which include clarity on standalone retail partners as agents and meeting the 'fit and proper' norm. Besides they are also seek lucidity on cash-outs in 'people-to people' (P2P) money transfers.

Vodafone and Airtel did not comment on the news.

Idea Cellular stock price

On July 22, 2014, at 14:13 hrs Idea Cellular was quoting at Rs 145.95, up Rs 6.20, or 4.44 percent. The 52-week high of the share was Rs 188.35 and the 52-week low was Rs 125.10.

The company's trailing 12-month (TTM) EPS was at Rs 4.77 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 30.6. The latest book value of the company is Rs 44.61 per share. At current value, the price-to-book value of the company is 3.27.