The payment bank license would allow Airtel M Commerce Services to pay out and accept cash.
The new type of license, which was established by the Reserve Bank of India (RBI) in a bid to encourage competition in the banking sector, would allow the company to offer services such as remittances and deposits.
According to Bharti Airtel, Mumbai-based Kotak Mahindra Bank plans to buy a 19.9% stake in the company upon obtaining a payments bank permit.
The parties have not revealed the financial details of the transaction.
Bharti Airtel chief executive officer for Indian operations Gopal Vittal said in a statement: "Kotak’s banking expertise coupled with Airtel’s strength in telecom will help deliver financial services to millions of unbanked citizens across the country,"
RBI, in November, has invited applications from companies interested in opening new payment banks and small finance banks, as part of its aim to bring Indians without bank accounts into the financial system, The Wall Street reported.
