RBI has taken an advanced step to push our financial inclusions by providing the guidelines for licensingdifferentiated banks such as
Payment Banks and Small Finance Banks.On November 27 2014, RBI released the final guidelines for payment banks.These
guidelines will allow mobile firms and other valid entity to enter the banking field to service the individuals and small businesses.
What is Payment Bank?
The main objective of the payment bank is providing small savings accounts and payments or remittance services to low income
households,small businesses,other unorganized sector entities and other users.
Guidelines and Regulations provided by RBI for Payment Banks
DO’s
i.These banks can able to operate current accounts and saving accounts.They can issueATM or Debit cards, Net Banking and
Mobile Banking facilities to their customers.
ii.The payment banks can take restricted deposits which is currently limited to₹1 lakh per customer.
iii.They can distribute the non-risk financial products such as mutual funds and insurance
Dont’s
They don’t have rights to provide lending services such ascredit cards and issue loans facilities.
Other Guidelines and Regulations to follow
1.The initial minimum capital requirement of ₹100 crore i
Payment banks cannot lend money, so from where will they get profit?
The payment banks are allowed to invest their customers deposit into government securities from which they can raise money.
How does the Payment Banks reach their customers in far flung areas?
i.Payment bank will reach through mobile phones.Further, bank correspondents can be employed to make reach the services of
Payment Bank to every citizen in villages.
ii.The recharge shops can play a crucial role in Payment bank expansion.A mobile wallet can be used for transactions.
List of Active Payment Banks:
On 19 August 2015, the Reserve Bank of India gave “in-principle” licences to eleven entities to launch payments banks.They are
1. Aditya Birla Nuvo
2. Airtel M Commerce Services
3. Cholamandalam Distribution Services
4. Department of Posts
5. FINO PayTech
6. National Securities Depository
7. Reliance Industries
8. Sun Pharmaceuticals
9. Paytm
10. Tech Mahindra
11. Vodafone M-Pesa
From the above , three entities “Cholamandalam Distribution Services”, “Sun Pharmaceuticals” and “Tech Mahindra” have surrendered
their licenses.
This license is valid for 18 months within which the entities must fulfill the requirements. They are not allowed to engage in banking
activities within the period. The RBI will consider grant full licenses under Section 22 of the Banking Regulation Act, 1949, after it is
satisfied that the conditions have been fulfilled.