Aditya Birla Payments Bank shuts operations 18 months after launch; what customers can do to get back deposits

Aditya Birla-owned Aditya Birla Idea Payments Bank, a venture between Idea Cellular and Aditya Birla Nuvo, has shut down its operations 18-months after it commenced operations. It was launched on 22 February 201.  Headed by Kumar Mangalam Birla, the group’s outfit Aditya Birla Nuvo had set up a 51:49 joint venture-Aditya Birla Idea Payments Bank-with telecom major Idea to launch payment bank services in the country.

Board approves voluntary winding up of Aditya Birla Idea Payments Bank. This decision has been taken due to unanticipated developments in the business landscape that have made the economic model unviable pic.twitter.com/7REJInqD2f

— CNBC-TV18 (@CNBCTV18Live) July 20, 2019

The Bank has asked its customers to transfer their balances before 26 July. “We will be restricting any further credits (add money) from 26th July 2019,” Aditya Birla Payments Bank said in a message to customers. According to media reports, Sudhakar Ramasubramaniam, the CEO of Aditya Birla Group, informed employees about the bank’s closure. [caption id=“attachment_1709329” align=“alignleft” width=“380”]  Aditya Birla Group Chairman Kumar Mangalam Birla[/caption] “We will be restricting any further credits (add money) to your account from July 26, 2019,” the bank says in a note to customers, adding that “full and complete arrangements” have been made for return of all deposits, a report in Moneycontrol said. On 19 July, the company informed the stock exchanges about its decision to shut down operations.“This decision has been taken due to unanticipated developments in the business landscape that have made the economic model unviable,” the company said in a regulatory filing. The payments bank struggled to garner deposits, despite the reach of its telecom network, said a report in Bloomberg. As of December 2018, the payments bank had mobilised Rs 5.62 crore in a segment dominated by Airtel Payments Bank and Paytm Payments Bank. The total  customer deposit with Aditya Birla payments Bank stands at Rs 20 crore, according to CNBC TV18.    Overall, payments banks held Rs 780 crore in December 2018, the report mentioned. Payments banks can accept deposits from individuals and small businesses up to a maximum of Rs 1 lakh per account.

Board approves voluntary winding up of Aditya Birla Idea Payments Bank. This decision has been taken due to unanticipated developments in the business landscape that have made the economic model unviable pic.twitter.com/7REJInqD2f

— CNBC-TV18 (@CNBCTV18Live) July 20, 2019

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The Payments Bank will continue to work with limited operations as guided by RBI to enable customers to withdraw deposits. It has 200 employees who will be absorbed in the Group’s other business, according to news reports. With the objective of deepening financial inclusion, RBI kicked off an era of differentiated banking by allowing SFBs (small finance banks) and PBs (payments banks) to start services. A total of 21 entities, were given in-principle nod, including 11 for payments banks of which Aditya Birla Idea Payments Bank was one. Customers can transfer the balance through online, mobile banking or by approaching the nearest banking point. They can also reach out on 18002092265 or write to vcare4u@adityabirla.bank.