1) What is a Payments Bank?
A Payments bank is similar to any other bank except it operates on a smaller scale. The Reserve Bank of India (RBI) introduced it in 2014 to increase the scope of financial inclusion to small savings account holders, low income households, small businesses, unorganised sector entities and migrant labour force.
2) What kind of services can it provide?
A Payments bank can accept a restricted deposit of up to Rs 1 lakh per customer and will pay interest on those balances just like a savings bank account.It can enable transfers and remittances through a mobile phone. It also offers services like automatic bill payments and digital purchased through the mobile phone. It provides debit cards and ATM cards that can be used on ATM network of all banks.
However, unlike our regular banks, a Payments bank cannot provide loans and credit cards to its customers.
3) Who is eligible to start a Payments bank?
Existing non-bank Pre-paid payment instrument issuers, entities like the Non-Banking Finance Companies (NBFCs), Business Correspondents (BCs), mobile telephone companies, super-market chains, companies, real sector cooperatives, and public sector entities can apply to set up payments banks. However, the minimum capital requirement to set up this bank is Rs 100 crore. The RBI has issued that 25% of a Payments Bank’s branches must be in the unbanked rural area. As per the rule for FDI in private banks, foreign share holding will be allowed in these banks.
4) Who has the RBI granted licences to launch Payments banks?
1-Aditya Birla Nuvo Ltd
2-Airtel M Commerce Services Ltd
3-Cholamandalam Distribution Services Ltd
4-Department of Posts
5-Fino PayTech Ltd
6-National Securities Depository Ltd
7-Reliance Industries Ltd
8-Dilip Shantilal Shanghvi
9-Vijay Shekhar Sharma
10-Tech Mahindra Ltd
11-Vodafone m-pesa Ltd
Of these, three—Chalomandalam Distribution Services, Sun Pharmaceuticals and Tech Mahindra—have surrendered their licences. Airtel, which became the first entity to receive a payments bank licence from the RBI in 2011, officiated its launch by Finance Minister Arun Jaitley on January 12, 2017 after conducting pilot projects in four states.
5) Why are Payments banks so important?
Payments Banks will magnify the potential of financial inclusion in the economy. It will empower those citizens who have only transacted in cash, to head towards formal banking. Traditional banks may be hesitant to open branches in every village due to its uneconomic returns, but a simple mobile phone coverage is all that is required now. Keeping in mind the government’s unwavered digital drive target, customers can shift from cash transactions to operating their accounts on their mobile phone and transact digitally.
India also serves as a big remittance market and with money transfers possible through mobile phones, workers and migrant labours could simply shift to Payments Bank and send their money home. Payment banks can also play a crucial role in implementing the government’s direct benefit transfer scheme, where subsidies on healthcare, education and gas are paid directly to beneficiaries’ accounts.
Source: dnaindia.com