Kotak Mahindra Bank will buy 19.9 percent stake worth Rs 98 crore in Airtel M Commerce Services Ltd (AMSL), which last year has been granted in-principle approval by RBI to convert itself into a payments bank.
AMSL is a 100 percent subsidiary of Bharti Airtel.
Kotak Mahindra has signed a share subscription and shareholders agreement on February 23, 2016 with AMSL and Bharti Airtel for agreeing to acquire 9,83,82,022 equity shares at Rs 10 each aggregating to Rs 98.38 crore being 19.90 percent of the paid-up capital of AMSL, the bank said in a regulatory filing to BSE.
The bank said it has obtained approval from RBI for acquiring equity stake in AMSL.
On indicative time period, Kotak Mahindra said the acquisition will be completed "within ten days from signing of share subscription and shareholders agreement".
It added, the payment for the acquisition of shares in AMSL will be made in cash.
Last year, the Reserve Bank of India had given in-principle approval to 11 entities to set up payments banks, including AMSL.
AMSL, which was incorporated in April 2010, is in the business of providing services of semi-closed prepaid instrument. It offers services under the 'Airtel Money' brand.
Total revenue of AMSL in FY2014-15 was Rs 121.4 crore as compared to Rs 42.6 crore in the previous financial year, as per Kotak Mahindra Bank's note to the BSE.
Reliance Industries, Aditya Birla Nuvo Ltd, Vodafone m-pesa, Tech Mahindra and Department of Posts are among the other entities given 'in-principal' approval by RBI to set up such niche banks in August last year.
Payments banks are allowed to collect deposits, initially up to Rs 1 lakh per individual, offer Internet banking, facilitate money transfers and sell insurance and mutual funds.
Last week, Aditya Birla Nuvo had announced a joint venture with group firm Idea Cellular to set up a payments bank.
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