India's nascent mobile banking sector saw some significant action on Wednesday with the signing of one joint venture ( JV) and one agreement between two of India's largest banks and two telecom companies to bring this new-age service to India's rural masses.
The country's largest telecom operator Bharti Airtel and largest public sector bank State Bank of India (SBI) signed a Rs 100- crore JV while private bank ICICI Bank and Vodafone signed a pact to offer mobile banking services.
The JV will start with an investment of Rs 100 crore to add value to the banking and financial services sector. SBI will hold a 51 per cent stake in the entity, while Airtel will hold the other 49 per cent in the Rs 100 crore JV. The deal will be concluded by March 31.
"We look forward to taking the benefits of banking to the Indian masses and building a more inclusive society," SBI chairman OP Bhatt said.
Airtel has over 15 crore subscribers, of which over 55 per cent of its prepaid users do not hold any bank accounts. With mobile penetration at over 60 per cent, the market possesses great potential for a collaboration that combines the strengths of both banking and telecom sectors.
This venture will become the business correspondent for SBI and provide other banking products and services at affordable cost to people in rural areas and areas which do not have SBI branches. As a business correspondent a bank employs another entity to offer its services.
Besides helping rural people to open no-frills bank accounts these business correspondents also accept deposits and remit money.
The JV, as a business correspondent, will engage Airtel's retailers as customer service points (CSP) across India in phases. Also, existing SBI customers will get serviced at these outlets. This first-of-its kind collaboration is aimed at making the concept of inclusive banking a reality in India.
"This will be a complete game changer, leveraging SBI's expertise in the banking sector along with Airtel's 150 million strong customer base and ecosystem of over 1.5 million retailers and distributors across India," Bharti Airtel's chairman and managing director (CMD) Sunil Bharti Mittal said.
ICICI Bank on Wednesday also entered into an agreement with mobile service provider Vodafone Essar to offer financial products such as savings accounts and pre-paid instruments.
"This partnership is expected to bring the unbanked and under-banked population into the organised financial services framework and assist in furthering the electronic payments market in India," both the companies said in a joint statement.
ICICI Bank will leverage the distribution strength of Vodafone, which manages over 1.5 million retail points for acquiring customers and servicing them.
Courtesy: Mail Today 
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