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.
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