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Voda-Idea explores M&A for Vodafone M-Pesa

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The payments bank has also launched its own mobile banking, internet banking and UPI services.
MUMBAI: Vodafone M-Pesa Ltd. (VMPL), the payments wallet owned by Vodafone Idea, is considering merging its business with an associate company or a third party, but in the interim, has applied to the Reserve Bank of India (RBI) for extension of its prepaid payment instrument (PPI) license.

“Presently, VMPL has applied to RBI for further extension of its PPI license while also evaluating option of merging this business with associate entity or any third party,” Vodafone Idea said during its fiscal fourth quarter results announced on Monday.

The moves are prompted by the fact that Vodafone Idea - created by the merger of Vodafone India and Idea Group – holds 100% of Vodafone M-Pesa Ltd. (VMPL) besides 49% shareholding in Aditya Birla Idea Payments Bank Limited (ABIPBL).

But, as per RBI guidelines, the same promoter group – in this case Vodafone Idea - cannot have a payments banking business in one entity and prepaid payment instruments (PPI) business in another entity.

‘Based on various discussions, the regulator (RBI) had initially permitted these two entities to carry on the business until December 31, 2018 which was later extended to March 31, 2019,’ the telco said, adding that it is now in talks with the central bank for a further extension of the PPI license, while also exploring an M&A for the business.

The Kumar Mangalam Birla led group has been pressing the accelerator on its payment banking business since it received the license from RBI in April 2017. The services were launched in February 2018 and it is running a pilot across five districts of Gujarat and Maharashtra to test business concepts along with evaluation of its systems and processes.

The payments bank has also launched its own mobile banking, internet banking and UPI services. “The payments bank intends to promote a wide range of banking products & services including current and savings bank account, domestic remittances, merchant payments and enterprise solutions,” said the telco.
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