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 correspondenceĀ  of another bank. They can also distribute simple financial products like mutual fund units and insurance products. Continue reading