Airtel M Commerce Services Limited (AMSL), a subsidiary of India’s largest operator, is the first company to receive a full licence that will enable it to pursue the untapped market among the country’s millions of unbanked users.

AMSL was granted a payments bank licence by the Reserve Bank of India (RBI), said a statement to the Bombay Stock Exchange.

The Bharti Airtel subsidiary was one of eleven firms which last August were given in-principle approval by the RBI to provide such services. It is the first to have that approval upgraded to a full licence, so it can engage in banking business.

Payments banks are allowed to take deposits and transfer payments for users but they cannot lend funds. Nevertheless, the likes of AMSL hope they will appeal to the target market of small businesses, low income households, farmers and migrant workers.

Other in-principle licence winners last summer included Vodafone M-Pesa, along with Aditya Birla Nuvo, parent of Idea Cellular and Reliance Industries, whose subsidiary Reliance Jio Infocomm has ambitious plans to launch 4G in India from scratch.

The fact that the country’s three largest operators, and a powerful newcomer, are backing the concept increases payments banks’ chances of success.

Airtel’s partner on payments is Kotak Mahindra Bank, which acquired a 20 per cent stake in AMSL in February this year.

The operator already offer its Airtel Money service but the payments bank licence enables it to fill out its financial offering so that it is closer to being a full-fledged bank.