Less than two years after it was started, Aditya Birla Payments Bank is set to shut down shop.
In a regulatory filing, the Vodafone-Idea combine said the Board of Directors of its associate company, Aditya Birla Idea Payments Bank Ltd (ABIPBL), has, subject to the receipt of requisite regulatory consents and approvals, approved the voluntary winding up of ABIPBL.
“This decision has been taken due to unanticipated developments in the business landscape that have made the economic model unviable,” it said.
Aditya Birla Idea Payments Bank Ltd (ABPB) is a full-service digital bank, incorporated with 51:49 equity stake held by Grasim Industries Ltd and Idea Cellular Ltd.
The bank’s customers have been informed that they can transfer the balance in their accounts to any other bank account and that the bank would restrict any further credits (add money) from July 26, 2019.
Sources said the bank has been struggling to garner deposits. It is likely to fully cease operations in the next three months.
Customers in payments banks can deposit up to Rs 1 lakh in their accounts. These banks can’t lend money. The RBI had issued guidelines for payments banks in November 2014 with the objective of improving financial inclusion. However, most payments banks have struggled to take off.
Aditya Birla Payments Bank was one of the seven banks given a licence under the scheme in 2015. It started operations in February 2018.