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Airtel Digital invests in Tata Group’s Ferbine for larger Finance Play




Airtel Digital Ltd. is a wholly owned subsidiary of Bharti Airtel and has agreed to purchase 10% stake for Rs 50,000 in cash in Tata Group’s Ferbine Private Ltd. This move from Airtel Digital comes as an attempt to own a stake in Pan-India Umbrella Entity (PUE). PUE is formed to challenge the National Payments Council of India (NPCI). 

“The Investee Company has been incorporated on January 18, 2021 to make an application to RBI for the PUE license. The main business of the company would be to operate a pan-India umbrella entity for retail payment systems, as would be allowed/ licensed by RBI, subject to approval of the PUE application,” told Airtel in a notice to stock exchanges. 

Airtel Digital already runs a bank and plans to become a small financial banking institution in the near future. This transaction of purchasing a stake in Ferbine will help to achieve that motive. The company expects this transaction to be complete before March 5, 2021. 

Private banks such as HDFC and Kotak Mahindra Bank have also joined the race by purchasing 9.99% stakes each in Ferbine. The Reserve Bank of India (RBI) started accepting applications for setting up PUE in August 2020. PUE is entitled to set up, manage and operate its own payment systems for the retail industry. The new services for PUE will include PoS, ATMs, Aadhaar-based payments, and remittance services. 

PUE is expected to innovate and develop systems that will be able to interact and operate with the existing NPCI operating systems. Applicants can now submit their applications till March 31, 2021, but they must have a minimum of three years of experience in the payments space. The applicants must also have a minimum paid-up capital of Rs 500 crore according to RBI guidelines. 

The PUE, unlike NPCI, can be a for-profit entity. However, no single promoter is allowed by RBI to have more than 40% investment in the capital of the PUE. Several public and private banks of India such as SBI, ICICI Bank, HDFC Bank, Axis Bank, Bank of Baroda, Kotak Mahindra Bank, and Yes Bank are interested in participating in PUE. 

Global companies such as Visa, Amazon, Master Card, PayU, Bill Desk, Pine Labs, Flipkart, SoHum, and Paytm might also join the race.

Prajakta Kshirsagar is a Sr. Editor at The Entrepreneur Tab. She is also the Founder of Social Coverage Media, a 360 Digital Marketing Agency. She has spent around half of her career working with brands and businesses which were dominantly using classical mainline digital advertising and thinking.

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