Payments
Bank: All You Need to Know
Dear Aspirants,
Welcome to Mentor for Bank Exams. Here we are
sharing all the important information about Payment Banks that you need to
about, to crack any Bank interview. Kindly go through the article and comment
your doubts or suggest necessary changes (if any).
Introduction:
The need for banks is on
the rise as the customer base of every banks increases multiple fold. Yet the
unbanked section in India amounts to a bigger number. Even though there are
multiple Banks providing banking solutions to the people of our country, the
reach of those banks is limited and still there are places where people don’t
use banks for their savings and other things.
Formation of Payments
Banks:
In 2013, Committee on
Comprehensive Financial Services for Small Business and Low Income Households
headed by Nachiket Mor, was formed by the RBI. That committee recommended the
formation of new category bank called Payments Bank.
In 2015 the RBI gave in-principle
licenses to 11 to launch Payments Banks. Out of 11, Three have surrendered
their licenses.
The minimum paid-up
equity capital for setting up of these banks will be Rs.100 Crore NBFC
(Non-Banking Finance Companies), Telecom Companies, Supermarket Chains, Pre-
Paid Payment Instrument (PPI) Issuers etc. can apply for Payments Bank license.
These Banks will focus on
Payments & Remittances only.
Guidelines for Payments Bank
- Payments Bank can take deposits
only on Current Accounts & Savings Accounts
- Maximum Balance per Customer is
restricted up to 1 Lakh
- Cannot accept FD’s & RD’s
- It can issue Debit Card
- It cannot open NRI Accounts
- It cannot issue Credit Card
- It cannot give loans.
- It can invest depositor’s money
in Government Securities only
- Payments Bank can distribute
financial products such as Insurance, Mutual Funds, and Pension Products,
accept utility bill payments etc.
- Liabilities should not exceed 33
times of its net worth
- Payments banks will be required
to invest at least 75%of their demand deposits in Government Securities.
Promoter of the Payments
Bank should hold at least 40% of its paid-up equity capital for the first 5
years from the commencement of its business.
Airtel Payments Bank is
the first Payments Bank established in India.
Can & Can’t in Payments Bank
List of Payments Bank
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
Out of these, three have
surrendered their licenses. First one being "Cholamandalam Distribution
Services", then "Sun Pharmaceuticals" and the latest, "Tech
Mahindra".
The
"in-principle" license is valid for 18 months within which the
entities must fulfil 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.
Tagline
India Post Payments Bank
– Aapka Bank, Aapke Dwaar
Airtel Payments Bank –
Bank Hai Par Alag Hai
Payment Bank and Joint
Venture Between:
“The ‘in-principle’
approval granted will be valid for a period of 18 months, during which time the
applicants have to comply with the requirements under the guidelines and
fulfill the other conditions as may be stipulated by the Reserve Bank”.
Conclusion:
The main motive is to
give banking solutions to the first time users and also provide them with
digital solutions. Since the cost of initiating a new scheduled bank will be
high , the payment bank will become a disruptor in that section. This will be a
change maker in the industry and this is a bold step in refining the various
section in the banking system. Banking will become more prevalent in the rural
regions and the unbanked section will become less in the forthcoming days.
