PAYMENT BANKS IN INDIA-AN OVERVIEW

Reserve Bank of India grants banking licences for two kinds of banking, namely, Universal bank Licence and Differentiated Bank licence. Payment Banks comes under differentiated bank licence since it cannot offer all the services that a commercial bank offers.

A payment bank cannot lend, it cannot issue credit cards but can take deposits up to Rs. 1lakh per account.

Objective: Main objective of Payment banks is to work towards Financial inclusion by providing small saving accounts and payment/remittance services to migrant labour workforce, low income households and other unorganized sectors.

Work Allocation: Other than remittance and saving services, a payment bank can work as business correspondence  of another bank. They can also distribute simple financial products like mutual fund units and insurance products.

Requirement- RBI has mandated the minimum paid up  equity capital for payments bank as Rs. 100 crore. They have to maintain Cash Reserve Ratio (CRR), have to invest minimum 75% of demand deposit balances in statutory Liquidity Ration (SLR), eligible government securities or treasury bills with maturity up to one year and hold a maximum of 25% in current and time/fixed deposit with other commercial banks for operation purpose and liquidity management.

Eligibility: RBI permits non-bank Prepaid Payment Instrument (PPI) issuers, individuals and professionals, NBFC, corporate business correspondents, mobile telephone companies, super market chains, real sector cooperatives that are owned and controlled by residents and public sector entities .

Present Status: out of 11 entities that received in-principle licence for opening payment bank, 7 entities received final licence and 4 entities has started payment bank operations.
1. Airtel payment bank
2. India post payment bank
3. Paytm payment bank
4.Fino payment bank.

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