The Reserve Bank of India (RBI) has given in-principle approval to Aditya Birla Nuvo Limited, Airtel M Commerce Service Limited, Reliance Industries Limited and Vodafone m-pera limited, among others to open payment banks. This move comes with a view to widen the reach of banking services and push the government’s aim for financial inclusion.

The in-principle approval will be valid for 18 months, after which the entities will be given formal licences. The companies would however need to fulfill certain conditions stipulated by RBI. The central bank intends to use the learning from this licensing round to revise the guidelines in future.

The payment banks will provide basic savings, deposit, payment and remittance services to people without access to the formal banking system. These banks will target financially excluded customers like migrant workers, low-income households and smaller businesses. However, payment banks will not be able to provide lending services.