Bharti Airtel and Kotak Mahindra had jointly applied for payment bank license through its subsidiary AMSL in 2011 and has now received it from Reserve Bank of India.
RBI has given a primary approval to 10 small finance banks and 11 payments banks who will launch operations later this year or early next year.
Airtel provides mobile money services under the brand name Airtel Money and had earlier proposed to convert the pre-paid payment instrument license into a Payments Bank license as per the guidelines prescribed by the Reserve bank of India.
With the license, Airtel now plans to increase the reach of its M Commerce Services. This move will help Kotak to reach out to the unbanked population and target the rural people.
Earlier in February, Kotak had picked up 19.9% stake in Airtel M Commerce for Rs 98.4 crore.