Payment Banks - India

India, a country where out of 1.27 billion people, we have touched 1 Billion Telecom subscriber base while on other hand as per World Bank Report of 2014, around 35% population have access to formal Banking system.

To promote the Modi Government’s vision of financial inclusion and Digital India, RBI issued guidelines and invited applications for Payment bank licences.

It received 41 applications from various companies such as telecom operators like Bharti Airtel and Vodafone, retailers such as the Future Group, several payment facilitators such as Oxigen and One97, and large conglomerates like Reliance Industries and Aditya Birla group and few others.

What is a Payment Bank?

Objective of payments banks is to increase financial inclusion by providing small savings accounts, payment/remittance services to migrant labour, low income households, small businesses, other unorganised sector entities and other users by enabling high volume low value transactions in deposits and payments/remittance services in a secured technology-driven environment.

This will mainly help the lower strata of society who doesn’t have access to formal banking but has the necessity of money transfer and remittance service. A CRISIL report projects that the current Rs 80,000 crore to Rs 90,000 crore domestic remittances market will grow at  11% to 13% CAGR in the next few years based on an assessment of remittances to the low-income migrant population. This segment is expected to be among the early users of payments banks.

Finally on 19^th August 2015 RBI gave In-Principle approval for Payment Bank licences to following 11 entities:

Reliance Industries

Aditya Birla Nuvo

Vodafone M-Pesa

Bharti Airtel

Department of Posts

Cholamandalam Distribution Services

Tech Mahindra

National Securities Depository Limited (NSDL)

Fino PayTech

Sun Pharma’s Dilip Shantilal Shanghvi

PayTM’s Vijay Shekhar Sharma

 Things you should know about Payment Banks

·         Can accept demand deposits, i.e., current deposits, and savings bank deposits from individuals, small businesses and other entities.

·         Can hold a maximum balance of Rs One lakh per individual customer.
 
·         Will be allowed to set up branches, ATMs, BCs.
 
·          Allowed to issue debit cards also offer internet banking.
 
·         Can accept a large sum of money for remittance but at the end of the day the balance should not exceed Rs. One lakh.
 
·         Allowed to accept remittances to be sent to or receive remittances from multiple banks.
 
·         Permitted to handle cross border remittance transactions in the nature of personal payments / remittances on the current account.
 
·         Allowed to distribute mutual fund products, insurance products and pension products.
 
·         Can allow various bill payments.

But they have following restrictions

·         Payment Banks Cannot issue credit card
 
·         Not allowed to set up subsidiaries to undertake non-banking financial services activities    
 
·         Other financial and non-financial services activities of the promoters should not be mingled with the working of payment banks
 
Appropriate and affordable technology accompanied by the right business model can make financial inclusion economically viable for the formal financial sector and transform it from an obligation to an opportunity.

Malay Maniyar

Batch - 2017

Symbiosis Institute Of Telecom Management 

Call Drops - India

What is a dropped call?

When a mobile phone call gets terminated due to the failure of getting latched to a nearby mobile site or a base station (also known as dead zones), this unexpected termination is termed as a call drop.

Why is it a major concern?

According to TRAI’s report for June 2014 quarter, there was an increase of 5 % in the call drops from March 2014 to June 2014, resulting into 14 % call drops of all 3G operators. For 2G, out of 183 operators, almost 13 % amongst them had call drops of 3.28%. So, the irking statement while making a call ‘The xyz Operator you are calling seems unavailable at the moment’ is going to be heard quite often if the situation prevails.

Why call drops in India?

1.      Insufficient number of towers.

·         Current number: 4.25 lakh (Approx.)

·         Required: 6.25 lakh

2.      There has been a remarkable rise in the data and voice traffic which the current spectrum supply cannot suffice. Indian operators hold an average of 12-15 MHz of airwaves compared to 40-45 MHz Globally.

Effect on operators?

 There is no gain for an operator if the CDRs are generated on second basis, but if the subscriber has opted for a certain number of free calls plan or if the CDRs are generated on per minute basis, consumers are affected more. Also the ARPU generated per minute gets reduced.

How to deal?

Government’s role:

·         Some spectrum from the defense services can be released for use.

·         The roofs of the government buildings can be utilized for setting up towers

·         Uniform procedures on towers must be followed and implemented.

Operators’ role:

As there have been constant alarming warnings from the Prime Minister Narendra Modi and Telecom Minister Mr. Ravi Shankar Prasad, Telcos claim that they are helpless despite making huge investments of 1.34 lakh crores in spectrum and network. There has been constant demands from the operators for allowing the access to Government premises and cantonment areas to overcome this horrendous problem.

Rajat Arora

Batch - 2016

Symbiosis Institute Of Telecom Management