The three had, together, decided to set up a payments' bank; Earlier Cholamandalam Group had pulled out of the race.
India's second richest man and Sun Pharma founder Dilip Shanghvi said on Friday he had shelved plans to form a payments bank jointly with the IDFC Bank and an arm of Norway's Telenor, but did not disclose the reason.
Shanghvi's company, Dilip Shanghvi Family and Associates, was among 11 firms that were awarded licences last August to set up niche "payments banks" aimed at granting millions of Indians access to basic banking.
They are the second applicant to withdraw after Cholamandalam group pulled out of payments banks race a couple of months back.
Last year, Shanghvi as lead applicant, along with Telenor Financial Services and IDFC Bank was granted in-principle license by RBI to form a Payments Bank – a differentiated bank that confine its activities to acceptance of demand deposits, remittance services and other specified services.
"This decision, collectively made by the three partners, will be communicated to Reserve Bank of India. Consequently, the payment bank license will not be pursued," they said in a joint statement.
During the past eight months, representatives of these three partners have worked together to establish relevant frameworks and a governance structure for the proposed joint venture (JV), the statement added.
"The intention of the JV was to combine our expertise to launch a robust payment bank service in India. Following the mutual decision to withdraw these plans, the payment bank license will not be pursued," Shanghvi said.
"It was a good experience working with Telenor Financial Services and Dilip Shanghvi over the last year. We thank them for their support and look forward to future associations," said Rajiv Lall, founder MD & CEO IDFC Bank said.
While the partners did not disclose reasons, Telenor Financial Services senior VP and head Tine Wollebekk said: "From the day we signed the Letter of Intent, we have worked hard together with our partners to form a company which can meet the demand for basic banking services across India."
The development is in contrast to announcement by Aditya Birla Nuvo Ltd (ABNL), which said on Friday it plans to commence payments bank services by the end of the financial year.
In August last year, the RBI had granted ''in-principle'' to set up payments banks and had also proposed such licences ''on tap'' in future.
The in-principle approval is valid for a period of 18 months, during which time the applicants have to comply with the requirements under the guidelines and fulfil the other conditions as may be stipulated by Reserve Bank.
The Payments Bank will not be allowed to undertake lending services and non resident Indians will not be allowed to open accounts.
The other nine entities that were given in-principle approval included Airtel M Commerce Services Ltd, Vodafone m-pesa Ltd, Department of Posts, Reliance Industries Ltd and Tech Mahindra Ltd.
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