RIL’s 4G play helped seal tie-up with SBI

MUMBAI: Reliance Industries' (RIL's) nationwide 4G spectrum was a deciding factor in State Bank of India (SBI) agreeing to pick up a 30% stake in the payments bank that Mukesh Ambani's flagship company plans to launch. RIL is expected to roll out its 4G services under the name 'Jio' this year and has announced investments of over Rs 70,000 crore in the telecom business.

Explaining the rationale behind partnering the energy giant, SBI chairman Arundhati Bhattacharya said, "The payments bank has been brought out by RBI to improve financial inclusion and to ensure ease of small-value payments. This requires a strong technology platform as well as spectrum. RIL has a good pan-India spectrum. They also want to launch a 4G offering which is good for data."

She added that SBI complemented this with the country's largest customer base, which it planned to increase even more. "To service these accounts, we need a way in which payments can be done from handhelds and preferably from mobiles, and therefore we thought of this kind of a tie-up where the other partner will come with the spectrum and technology." She added that SBI had the banking skills and banking accounts.

Bhattacharya said that the bank would capture the payments behaviour of the new bank's customers and use analytics to work out their creditworthiness. "This will enable us to look at their payment histories and lend to them from the main bank itself. It will help bring about better financial inclusion," she said.

She added that an equity stake was important as a strategic partnership might not work. "We would like to bring our knowledge as to how banking is done and a stake in the whole thing ensures that we are able to put in our experience and our knowledge there as well," she said.

State Bank of India

Reliance Industries Limited (RIL)