Payment Bank License

What does the bank mean?

Reserve Bank of India (RBI) formulates / conceptualizes the branches / outlets, ATMs, market correspondents, etc. that are also recognized as segregated banks. Rs. 1 lakh per consumer is the current investment cap that can be received by payment banks that may be raised in the future. Payment Bank operates both the current account and savings accounts. Such banks offer facilities such as debit card issuance, online banking, mobile banking and ATM cards. The minimum capital threshold for payment banks is Rs. 100 crores.

Payment banks are regulated by laws?

Business Policy, 2013.

  • Act of 2007 on Transaction and Settlement Programs.
  • Policy on the allocation of foreign exchange, 1999.
  • The Indian Reserve Bank Order, 1934.
  • Act on Deposit Insurance and Credit Guarantee, 1961.
  • Legislation of 1949 on Banking Regulation.
  • Other rules and regulations that may be applicable from time to time.

What are Payment Banks ' main goals?

Small savings account maintenance

Labor, low-income households, unorganized industries, small businesses, etc. are also equipped with payment and remittance facilities as well as low-value high-volume transfers.

Eligible participants

  • Under the Payment and Settlement Systems Act, 2007, authorized non-bank payroll payment device. (They should vote for transfer card conversion).
  • Men / experts.
  •  Organizations that are not financial financing.
  • Correspondents with organizations.
  •  Companies in the telecoms industry.
  • The chains of stores.
  •  State companies.
  • Real-sector cooperatives.
  • Public-sector departments.

What are Payment Bank's key points?

  • Current deposits are allowed to people, small businesses, saving bank deposits up to certain strictly defined limits.
  • Non-resident deposits are not allowed.
  • ATM / Debit cards (although no credit cards) are provided by such payment institutions.
  • Transaction bank also provides internet banking facilities and low-cost payment options. Payment banks are required to comply with RBI guidelines on internet banking, information security, electronic banking, technology risk management, and cyber laws in addition to these facilities.
  • Transaction institutions can recognize remittances as a channel. (Similar to RTGS / NEFT / IMPS).
  • Payment banks are not allowed to lend.

What are the moves to acquire a Payment Bank License?

Step 1: Incorporate a public limited company in compliance with the Companies Act 2013 and RBI rules, with the main objective of functioning as a payment channel.

Step 2: Request is sent to the Chief General Manager of the Indian Reserve Bank.

Step 3: The recommendation shall be reviewed by the EAC (External Advisory Committee) which may seek more details and discussions from the claimant.

Step 4: The license shall be given by the Reserve Bank of India (RBI) license after the eligibility criteria have been fulfilled.

Step 5: The name of the claimant will be listed on the official Reserve Bank of India (RBI) website.

Step 6: Banks are required to set up within 18 months of receiving the Reserve Bank of India (RBI) principle approval.