What is holding up Jio Payments Bank launch?

“Since the licence was granted, the business model has undergone a lot of changes. There is a business plan in place, but it needs more tweaking," said a senior official with Jio Payments Bank on the condition of anonymity.

Payments banks are driven primarily by mobile technology and can ease the account opening process by making it technology-based and paperless. They can offer small savings accounts, payments, and remittance services to small businesses and low-income households.

Since their purpose is to reach out to the under-banked and unbanked masses, they can accept deposits only up to ₹2 lakh per customer in a savings/current account. They cannot, however, offer loans.

Officials at SBI said that the bank is only a 30% partner in the venture, and hence they are not involved in the day-to-day operations of Jio Payments Bank.

“Generally, it always happens with organizations in an evolving market. It is a very dynamic situation, so you have a concept in mind, and when you are closer to launch, you realize regulations are changing. So, you sit back a while and review your model, and that is quite natural," said one of the people cited above.

RIL and SBI spokespersons did not immediately respond to queries.

To be sure, the payments bank started operations on 3 April 2018 but is yet to do a full-fledged launch in the market. A report of Jio Payments Bank’s board accompanying its FY21 financial results pointed out that the bank has “continuously and quietly built multiple banking products that are hygiene in terms of capabilities but differentiated in terms of experiences."

According to the document, the payments bank is powering the different banking needs at the Reliance group and testing the platform before a full-fledged rollout.

“The bank today opens current accounts jointly with Reliance Retail’s PoS (point of sale) acquiring programme as a part of the JioMart merchant onboarding programme. The bank offers features such as the instant opening of accounts, real-time settlements and payouts for PoS transactions," the document said.

In FY21, it reported a loss of ₹89.7 crore on the back of ₹13.39 crore revenue. In the previous financial year, it reported a profit of ₹50.36 lakh on a revenue of ₹19.39 crore.

Also, in 2020-21, Jio Payments Bank was fined ₹1 crore by the Reserve Bank of India (RBI) for the delay in applying for reappointment of its managing director and chief executive officer.

Earlier this year, H. Srikrishnan, the then chief executive, “offered himself for reappointment" but later resigned. The board of the payments bank had recommended the appointment of Vinod Easwaran, a senior executive of Reliance Industries, as the new CEO to RBI, and the regulator approved his appointment for three years on 18 November.

In August 2018, RIL’s telecom arm, Reliance Jio, integrated SBI’s Yono platform onto its MyJio mobile app. RIL was also moving its JioMoney prepaid mobile wallet customers to Jio Payments Bank.

SBI Yono is an omnichannel platform offering digital banking, commerce and financial services in one place.

The model of a payments bank in India faces several hurdles and has not taken off as intended by the central bank when guidelines were issued in 2014.

They were created following the recommendations of the Nachiket Mor committee for strengthening financial inclusion.

The first and foremost hurdle is the complete prohibition on lending. In 2019, two payments banks—Vodafone M-Pesa and Aditya Birla Payments Bank—shut operations and a report by SBI research had pointed out how such banks face stringent regulations on both asset and liability side.