ICICI Bank might explore tie-ups with new banks

ICICI Bank, the country’s largest private sector lender, has said it will be keenly watching the progress made in the payments banks space before deciding on a tie-up.

“We'll watch the progress in both and will continue to move forward, we have tie up with Fino and Vodafone,” said Chanda Kochhar, managing director and chief executive officer of ICICI Bank.

Both Fino PayTech and Vodafone M-Pesa have been granted payments bank licences by Reserve Bank of India on Wednesday. Vodafone, along with ICICI Bank, had launched the mobile payments service under the name M-Pesa. On the other hand, Fino, a payments technology solutions firm, is promoted by ICICI Bank.

Though SBI Chairman Arundhati Bhattacharya has raised concerns over the entry of payments banks in the system, Kochhar believes that instead of being competition, it will complement the existing banks.

“The entry of new players will enhance the financial ecosystem and will also make existing banks technology savvy and get them to come out with new products,” Kochhar said.

However, SBI has voiced concerns over the adverse impact of payments banks on savings banks' account portfolio of commercial banks. The lender apprehends poaching of accounts by new payments banks.

“We have opened so many accounts under Jan Dhan Yojana, which are essentially savings accounts, which are just about getting active. In SBI, 56 per cent of them are still inactive. We are now pushing to make them active. Now we are getting 11 new players in payments bank space. Now with so much of competition, there will be poaching and we do not know methodology of it — how that will happen. It may cannibalise the existing business,” Bhattacharya said.

ICICI Bank