New banks, insurers eye pumps for biz

MUMBAI: The ubiquitous petrol pump is set to be the next big physical touch point for financial services after bank branches. The oil ministry will leverage its proposed network of 86,000 petrol pumps to tie up with banks and have ATMs and manned kiosks to provide banking and insurance services.
The decision was taken at the meeting of the consultative committee of parliament for the petroleum ministry, chaired by petroleum minister Dharmendra Pradhan in presence of parliamentary affairs minister Rajiv Pratap Rudy, to discuss marketing of petroleum products in a competitive environment.
The petroleum ministry has decided to work along with the finance ministry and the skill development ministry to create an integrated model of petrol pumps whereby consumers besides fuelling their vehicles will have the option to buy banking, financial and insuran ce products. At present, there are close to 54,000 company-owned fuel outlets, to which the government is planning to add an additional 32,000 over ten years.
New banks are excited about the distribution opportunity that these outlets will provide. According to Vijay Shekhar Sharma, founder and CEO of mobile payments firm Paytm, the petrol outlets are the lifeline for much of India. They are also points which see high frequency and repeat transactions and there is an element of trust. Both these factors make it ideal for extending financial services to unbanked places.
The RBI recently approved 11 applications, including that of Paytm, for setting up payments banks.These promoters are not looking at setting up new branches of their own but aim to leverage other existing networks. Petroleum minister Pradhan said, "Our plan is to convert most retail outlets into multipurpose utility hubs. From being simply retail outlets, these will act as service delivery points such as payments banks. The oil ministry is in talks with finance ministry to allow state-owned OMCs to convert these into payment bank kiosks."
According to BPCL chairman S Varadarajan, the number of ATMs housed in BPCL outlets is larger than some of the bank ATM networks. "The new payments banks and insurance firms will have an option to sell their products at our retail outlets," he said.