This Indian Company Shows How to Find Opportunity in Difficult Times for an Economy

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Airtel has been fast & furious.


When the whole country was expecting the nation's most popular digital payments wallet company Paytm to launch its payments bank, Airtel surged ahead in its efforts and launched India's first payment bank.

Airtel Bank, a subsidiary of Indian telecom giant Bharti Airtel Limited said it has rolled out a pilot of its banking services in the Indian state of Rajasthan.

"The pilot is aimed at testing systems and processes ahead of a full scale pan Indian launch," Airtel said.

The launch of Airtel's payment bank comes at an opportune time for India when the Narendra Modi-led government announced a demonetization measure that pushed 86 percent of total currency notes out of the system.

In his crackdown on black money, Indian Prime Minister said all INR 500 & INR 1000 notes will tender illegal post December 31, 2016, and all the old notes must be exchanged for new notes.

The move is touted by many as the golden era for India to go digital. Airtel's timing is also seen as opportune.

Payment banks are a new model of banks that was conceptualized by the Reserve Bank of India under the governorship of ex-chief Raghuram Rajan.

These banks can accept a restricted deposit which is currently limited to INR 1 lakh per customer account but cannot issue loans and credit cards.

Payments banks can also issue services like ATM cards, debit cards online banking and mobile banking.

Airtel Bank, which will help customers open an account using Aadhaar-based e-KYC system, may end up having the last laugh.

To lure customers, the company is offering an attractive deposit rate of 7.25 percent on savings accounts as opposed to the commonly set 4 percent by most government banks.

Airtel Bank will commence the pilot with banking points at 10,000 Airtel retail outlets and it will allow free money transfer from Airtel to Airtel numbers within Airtel Payments bank accounts.

Airtel is expected to be followed by other payment bank licensees including digital wallets company Paytm, telecom players namely Vodafone, Idea Cellular, Reliance Industries and government-backed India Post and the National Securities Depository Limited.