Sun Pharma’s Sudhir Valia will invest in Pay Point for Payment Bank

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Sudhir Valia, executive director of Sun Pharmaceutical Industries and promoter of Fortune Financial Services, is acquiring a 51% stake in one of the applicants for a payments bank, Pay Point India Network, joining other high-profile aspirants such as Future Group’s Kishore Biyani, Muthoot promoter MG George Muthoot and Sun Pharma founder Dilip Shanghvi. 

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If the RBI decides to issue licences to both Shanghvi and Valia, it will probably be the first time the two will be in competition. Valia, who is Shanghvi’s brother-in-law, has close ties with the Sun Pharma promoter. Valia confirmed he is investing in Pay Point but said the terms were subject to it getting the licence. He didn’t disclose how much he would be investing in the company. Until recently, Valia held 26% in Telewings, the India arm of Norwegian telecom firm Telenor. 

Payments banks can undertake limited activities such as accepting deposits, providing payment and remittance services and distributing third-party financial products. But they can neither lend nor issue credit cards except as a business correspondent, or agent, of a scheduled commercial bank. More than 110 entities have applied for payments bank and small bank licences.

Seven-year-old Pay Point India, founded by first-generation entrepreneurs Ketan Doshi and Romil Meghani, chartered accountant Pradip C Mehta and legal professional Sajit Suvarna of DSK Legal, facilitates telecom and DTH recharges, utility bill payments, travel bookings and remittances.

Pay point India is also one of the largest business correspondents for SBI and offers services such as account opening, deposits and loans on behalf of the bank. Mahendra Vichare, founder and MD of Vichare Couriers, also holds a stake in his personal capacity in the firm. Valia’s investment will also be in his personal capacity although he sees synergies with Fortune’s asset finance arm, which provides auto finance to individualsAnd, to a large extent, they are already functioning like a payments bank except they can’t offer withdrawals,” said Valia. PPI (prepaid payment instrument) licencees like Pay Point have to first transfer the money from a prepaid wallet to a bank account before the customer can withdraw it. But with a payments bank licence, they will be able to offer direct withdrawals. These banks are envisaged as a tool to bring the financially excluded into the banking system.

Pay Point India has opened more than five lakh Jan Dhan accounts for SBI and processed .`1,500 crore of transactions so far, of which .`470 crore are remittances. “Financial services is our fastest growing vertical. Our existing services are growing and every year we are adding more services,” said Doshi, MD of Pay Point.

 

Source: EconomicTimes, Mumbai, February 10, 2015
http://economictimes.indiatimes.com/articleshow/46180659.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst