Mahindra Finance keen on payment bank JV with World Bank Group’s IFC

Tech Mahindra on Wednesday said its sister company Mahindra Finance will become equal shareholder if the Reserve Bank clears its payment bank licence, and the company is also in talks with the World Bank Group member IFC for a partnership in the foray.

“The Mahindra group is also in talks with IFC for a partnership for the payment bank which, if fructified, we will dilute stake,” Tech Mahindra mobility head Jagdish Mitra said.

“We will be forming a separate company and once we get an approval from the RBI, Mahindra Finance will become a 50 per cent partner,” he said.

The investment will be much larger than the Rs 100-crore minimum required by the RBI, Mitra added.

“It is a long-term business for us and the group is committed to capitalise as and when needed. It will be more than the Rs 100-crore and we already have money allocated,” Mitra said, adding the tie-up with IFC is more strategic than an equity partnership. The payments bank floated by the Mahindras wants to learn from the best global experiences, where IFC will be of help with experiences from its investee companies from the world over, he said, adding Tech Mahindra is also in talks with mobile operators for a tie-up.

The Reserve Bank accepted applications from over 40 companies/individuals last week for payment banks. Most of the big telecom players who possess huge distribution networks have entered the fray. Reliance Industries tied up with SBI; Airtel with Kotak Bank.

The group decided to have its technology company at the front-end because there are multiple regulatory approvals which the non-banking financier Mahindra Finance has to go through, Mitra said. 

The payment bank is a win-win opportunity for the group as the new venture will help Mahindra Finance with loan origination while EMI payments by borrowers will drive business for payment bank, Mitra said.

Core strategy of getting closer to the customer as part of its digital vertical got it to apply for the payment bank, he said, adding it continues to look at more opportunities. Mitra also said the company already has a pre-paid payment instrument called ‘Mobo Money’, which has been operational for over one-and-a-half years now.