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Aditya Birla Idea Payments Bank bids goodbye

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Aditya Birla Idea Payments Bank bids goodbye

Some goodbyes are forever and some are temporary with people/companies/brands making a comeback sometime later on in the market and our lives. Sounds quite nostalgia laced doesn’t it? Well, one hopes that the Aditya Birla Group revives its payments bank business soon, seeing as it has officially exited the market with its Aditya Birla Idea Payments Bank entity.

As per the latest reports, Aditya Birla Idea Payments Bank Limited has confirmed that it will be closing down its business due to several unanticipated developments which led to non-feasibility of its business framework or business model.

Aditya Birla Idea Payments Bank leaves market players surprised

Several existing players in the market are quite surprised at the sudden exit of Aditya Birla Idea Payments Bank, particularly since it is the 4th payments bank to close down after Cholamandalam Investment and Finance Company, Tech Mahindra and also the consortium of IDFC Bank Limited, Dilip Shanghvi, and Telenor Financial Services.

Based on its own regulatory filing, Vodafone Idea Limited has already stated that the Board of Directors at Aditya Birla Idea Payments Bank Limited or ABIPBL or its associated entity, have already given their approval to the voluntary closing down or winding up of the business subject to regulatory approvals and permissions. The filing contained the reason as being unanticipated developments that made the economic model of the company non-viable. Aditya Birla Idea Payments Bank was started in February last year and is the fourth entity to exit the market post the issuing of 11 licenses by the RBI (Reserve Bank of India) in August 2015.

Aditya Birla Idea Payments Bank Limited received its banking license on the 3rd of April, 2017, from the Reserve Bank of India (RBI) with a view towards executing its payments bank business and also obtained necessary authorization for running its PPI (Prepaid Payments Instrument) business. The payments bank commenced operations from 22nd February last year.

What experts feel

Several market experts feel that there are 200+ employees of the newly discontinued payments bank and most employees should be absorbed in other group companies while some will get assistance for being placed elsewhere. Otter experts have also opined that about Rs. 20 crore lies in deposits with Aditya Birla Idea Payments Bank. The bank is desirous of keeping customers non-hassled by this decision, particularly with regard to the fate of the money kept in the payments bank by them. Customers will get ample time and notifications for withdrawal/transfer of funds. Full operational closure may require anywhere around 3-4 months as per experts.

Aditya Birla Payments Bank has Grasim Industries Limited as its promoter along with Vodafone Idea Limited who have 51% and 49% shareholdings. Aditya Birla Idea Payments Bank had a loss of Rs. 24 crore by the end of the financial year 2017-18. Aditya Birla Group has already issued its statement, saying that the payments bank will be arranging for a total return of customer deposits and meeting all other liabilities while ensuring that customer accounts are closed in a secure manner with the settlement of all balances in a smooth manner. The bank will continue functioning for limited banking transactions as per reports and customers will get the facility for withdrawing or transferring their deposits as well. Customers have now been asked to transfer balances prior to the 26th of July, 2019. Further credit will be stopped beyond this date.

The stock exchanges were intimated about the decision to shut shop on the 19th of July, 2019, as per reports. The payments bank reportedly struggled to get ample deposits from customers in the wake of increasing competition. As of December last year, it has garnered Rs. 5.62 crore in a market category which is majorly led by Paytm Payments Bank and Airtel Payments Bank. Payments banks, overall, had a whopping Rs. 780 crore in deposits by December last year according to several studies and reports. Aditya Birla Idea Payments Bank Limited also suffered on account of the strict KYC regulations and constant market competition.

Those desirous of transferring their balance can do so via mobile banking or online. You can also get in touch with the nearest banking touchpoint for support in this regard. Call up 1800-209-2265 or email vcare4u@adityabirla.bank.

 

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