Sun Pharmaceuticals' Shanghvi 2nd aspirant to drop payments bank plans

Mumbai: Dilip Shanghvi of Sun Pharmaceuticals, along with proposed partners Telenor and IDFC, has decided not to move ahead on the in-principle approval received for setting up a payments bank. It's the second applicant to bail out. In March, Cholamandalam had said it would not set up a payments bank.
Shanghvi had received an in-principle nod from the RBI, as part of a three-way partnership in which he proposed to hold 41%, Telenor 39% and IDFC the remaining 20%.
The RBI had in August 2015 given 11 entities an in-principle approval to set up payments banks. The ones still in the fray are Aditya Birla Nuvo, Airtel M Commerce, IndiaPost, Fino PayTech, National Securities Depository, Reliance Industries, Vijay Shekhar Sharma, Tech Mahindra and Vodafone MPesa.
Bankers said that for someone without a distribution network, setting up a profitable business would be a challenge. Most of the other recipients had a large customer base.
"Telenor Financial Services and IDFC Bank have rich experience from offering financial services and the intention of the JV was to combine our expertise to launch a robust payments bank service in India. Following the mutual decision to withdraw these plans, the payments bank licence will not be pursued," said Shanghvi on behalf of Dilip Shanghvi Family & Associates.
Tine Wollebekk, SVP and head of Telenor Financial Services, said, "From the day we signed the letter of intent, we have worked hard together with our partners to form a company which can meet the demand for basic banking services across India. We are thankful to both IDFC Bank and Dilip Shanghvi for their efforts throughout this process."
Telenor is the only partner with a retail base but its distribution is not as strong as rivals such as Airtel or Vodafone, which have also won licences. In February this year, Wollebekk had told the media during the Mobile World Congress in Barcelona that Telenor was keen to launch a bank which would be a great start for its foray into financial services in India. "To be honest, India was a market that I was waiting to see how we should approach because India is not one market, it is one big continent and obviously, it's very attractive. We want to be in India but we are also very scared about how to be successful in India," she had said.