Reliance Industries has roped in the State Bank of India (SBI) as an active equity partner as it seeks a licence to extend affordable banking and payments solutions in the country with access to 15,869 branches and vast network of India's largest commercial bank.
 
 "Reliance Industries Ltd. (RIL) has applied for a payments bank licence. RIL will be the promoter and State Bank of India will be the joint venture partner with equity investment of up to 30 percent," the company said in a statement.
 
 The venture is expected to be dovetailed with Reliance's ambitious plans to launch a pan-India broadband service network, initially covering all the states and some 5,000 cities and towns, accounting for over 90 percent of urban India and over 215,000 out of some 645,000 villages.
 
 The company said the venture will have some other objectives, besides providing banking services to the un-banked, under-banked and small businesses in the country:
 
 – Lead and co-create an eco-system to provide accessible, simple and affordable banking solutions.
 
 – Digitize the country's payments systems and act as a catalyst towards a cashless society.
 
 – Democratise banking and payment services through massive adoption and low transaction costs.
 
 "The payments bank will leverage SBI's nationwide distribution network and its risk management capabilities along with the substantial investments made by RIL in its retail and telecom businesses," the company said.
 
 "It will deploy state-of-the-art technology, build scalable infrastructure and create extensive branch and business correspondent network in order to provide last-mile access and intuitive user experience to all sections of society."
 
 A payments bank, as defined by the Reserve Bank's draft rules, can accept deposits, both savings and current, up to a maximum of Rs.10,000 initially, with the stated primary role of extending payments and remittance services to small businesses and low-income households.
 
 Besides, physical branches, some key facilitators for such services can include ATMs, mobile and internet banking, authorised business correspondents and point-of-sale terminal locations, as in retail stores.
 
 In a way, Prime Minister Narendra Modi's Jan Dhan Yojana, to extend banking services to every household in the country, is expected to be a major incentive for the new venture proposed by Reliance and State Bank.
 
 As per the 2011 Census, 45 percent of India's rural population was un-banked and the new scheme launched by the prime minister has resulted in some 115 million bank accounts being opened in a short span of time — all of whom are potential customers.
 
 On the commercial side, the small and medium scale sector, which accounts for some 7 percent of India's gross domestic product and contributes 38 percent to the country's factory output, is crying for inclusion — another potential business segment for the venture.
 
 As far as State Bank is concerned, besides it vast branch network, it has also roped in more that 61,000 business correspondents across the country to expand its distribution network, and boasts some 225 million active accounts.