MEXICO CITY (Reuters) - Mexican banking regulator CNBV said on Thursday it received applications from 85 companies to formally operate in the country under its new fintech law as the government of President Andres Manuel Lopez Obrador pushes for more financial inclusion.

FILE PHOTO: Mexico's President Andres Manuel Lopez Obrador attends a news conference at the National Palace in Mexico City, Mexico, May 31, 2019. Picture taken May 31, 2019. REUTERS/Henry Romero

The government has been looking to both banks and fintechs as it aims to reduce cash in circulation to cut down on money laundering and corruption, and to draw more people into the formal economy.

Of the 85 fintechs, 60 applied to operate as electronic payment processors and 25 as collective financing companies, the CNBV said in a statement. It did not specify when the authorization process would be completed.

The CNBV said fintechs that have not yet sought authorization were no longer allowed to operate in the country and would face sanctions if they did. The Mexican Fintech Law was issued in March 2018.

Phone-based banking has proven a hit among the poor in other emerging markets such as China, India and Kenya. Those efforts have been driven by private sector companies that offer user-friendly, affordable apps.

In Mexico an estimated 44% of the adult population own no financial products. Many are put off by steep banking fees and past scandals, or they are too poor to save. Others shun the formal banking system to stay off the radar of tax collectors.

(For a graphic on financial inclusion in Mexico, see tmsnrt.rs/2IhXe8R)

Efforts to increase financial inclusion have been led by Finance Minister Arturo Herrera, who told Reuters in an interview earlier this year that the government planned to transition to direct deposit or digital wallets to dispense welfare benefits.

Herrera also expressed optimism that fintechs would finally bring much needed competition to the money transfer business, reducing the cost of remittances sent home by Mexicans abroad and therefore benefiting the poor that rely on these transfers.

The announcement from the CNBV comes a day after Spanish bank Santander said its venture capital fund InnoVentures made a $57.5 million seed investment in Mexican fintech startup Klar in what has been its largest investment in the country so far.

InnoVentures, which has $200 million in capital, has invested in 25 fintech startups since it was created in 2014. Mexico’s Klar received $7.5 million equity capital and $50 million debt.