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RBI granted ‘in principle’ approval for establishment of payment banks- An Overview

RBI GRANTED ‘IN PRINCIPLE’ APPROVAL FOR ESTABLISHMENT OF PAYMENT BANKS – AN OVERVIEW

Payment Banks 

  • An Overview:

On August 19, 2015 the RBI had granted ‘in principle’ approval to 11 entities for establishment of payment banks. The ‘in-principle’ approval shall be valid for a period of 18 months during which the applicants shall have to comply with the stipulated guidelines and fulfil other conditions as may be laid down by the RBI.

  • Concept of Payment Bank;

A payments bank is a type of non-full service niche bank in India. It can only receive deposits and provide remittances. It cannot carry out lending activities.

Payment banks are created to help a country to reach its financial inclusion targets. It is expected of payment banks to target migrant labourers, low-income households and small businesses by offering small savings accounts and remittance services with a low transaction cost.

  • Services that can be rendered by payment banks:

Accept demand deposits of upto Rs. 100,000 per individual customer. Issue ATM/debit cards usable on ATM networks of all banks.

Make payments and provide remittance services through various channels. Act as a Corporate Business Correspondents of another bank (BCs), subject to the RBI’s guidelines on BCs. Distribution of mutual fund units and insurance products, etc.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@caindelhiindia.com or call at 011-23343333

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