Mumbai/New Delhi: ICICI Bank Ltd on Tuesday launched Pockets, a mobile payments wallet for Android phones, which can be topped up with money from any bank account for making phone-based payments.

The entry into mobile wallets could help ICICI Bank, India’s largest private sector bank by assets and branches, get ahead of expected competition from the soon-to-be-launched payments banks in India.

The e-wallet app can be set up with basic personal details including name, mobile number and email ID and funded by any bank account. There is no know-your-customer (KYC) documentation required if the transactions per month are below 10,000, the bank said.

Chanda Kochhar, managing director and chief executive, ICICI Bank, did not deny this new offering was in anticipation of likely competition from payments banks. “The payment e-wallet allows everything that a payments bank can do. With this offering, we think that we are already offering the experience of a payments bank," she said.

Forty-one firms including companies such as Bharti Enterprises Ltd, Vodafone Plc and Reliance Industries Ltd (RIL) have applied for a payments bank licence when the deadline was extended earlier this month.

These banks will provide savings, deposits, payments and remittance services to people who do not have a bank account, including millions of migrant workers. They will not be allowed to lend.

ICICI Bank has so far not revealed its plans on the possibility of buying a stake in a entity that has applied for a payments bank licence, unlike some of its competitors—Kotak Mahindra Bank Ltd, State Bank of India (SBI) and Bank of India (BoI).

SBI has partnered RIL, controlled by billionaire Mukesh Ambani, while Kotak has tied up with mobile phone operator Bharti Airtel Ltd to set up a payments bank.

BoI on Monday said it has agreed to take a 19.9% stake in Mumbai-based payments bank applicant YouFirst Money Express Pvt. Ltd, a venture of two former Reliance Capital Ltd (R-Cap) executives. According to regulations, banks can take a maximum of 30% equity stake in the proposed ventures.

To be sure, Kochhar has not yet shut the door on a possible tie-up with a new payments bank. “We always believe in partnerships with as many people as possible. We are always open to tie-ups. But this new initiative is already out there to be used. This has everything that a new payments bank can offer. It is digital, linked to e-commerce and like a bank. I don’t think customers need to wait for any new initiative," Kochhar said on Tuesday.

ICICI Bank has a relationship with Vodafone’s mobile-to-mobile money transfer service m-pesa and also holds a stake in Fino PayTech Ltd, both of whom have applied for payments bank permits. But the bank has declined to say anything on a likely tie-up for a payments bank.

Abizer Diwanji, partner and head of financial services at accounting and consulting firm EY, said ICICI’s strategy is a pre-emptive one with an intent to capture the payments market before the advent of new banks but this plan is highly risky.

“This strategy will require a significant investment upfront because they have to market it aggressively and capture a chunk before others start operations. But it could backfire because ICICI has other products as well unlike the payments banks. If they get into it half-heartedly it could lead to nothing," Diwanji said. He added that in the next few years he expects a clear segregation between payments banks and other deposit-accepting large banks with each focusing on its niche businesses.

ICICI Bank’s new e-wallet is only a transaction account, which means it does not pay interest on the money it holds, unlike payments. However, if customers want to use the account for transactions more than 10,000, then ICICI Bank plans to offer a zero-balance savings bank account linked to this e-wallet but only after the necessary KYC documentation.

Payments banks are restricted to holding a maximum balance of 1 lakh per individual customer. They can offer payments and remittance services and issue ATM/debit cards, but not credit cards. Such entities can also distribute simple financial products such as mutual fund units and insurance products.

It is only after online payment solution providers such as Paytm and Oxigen Services have made the product popular that banks are waking up to mobile wallets. In January, HDFC Bank Ltd had introduced a mobile wallet.

“It is the competitive pressure that is drawing banks to mobile wallets. They have to save their customers from going to other wallet companies," said Pramod Saxena, chairman and managing director of Oxigen Services India Pvt. Ltd.

SBI India already has a mobile wallet solution in partnership with Oxigen. The bank is currently reworking its mobile wallet product and is expected to re-launch it in coming months, according to two people close to the development.

Saxena has company in Paytm co-founder Vijay Shekhar Sharma, who says, “We have made sure that the space is hot enough for others to come and try and solve the problem of the half a billion of India’s un-banked population."

Sharma is not afraid of competition. “Consumers will choose the best...we welcome companies to come and educate the people."

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