Payments Bank: All You Need to Know
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
|Accept demand deposits||Lend money|
|Hold only up to Rs. 1 lakh per customer||Take NRI deposits|
|Issue debit card||Issue credit cards|
|Distribute mutual funds, insurance, pension fund products||Set up a NBFC Subsidiary|
|Set up branches, ATMs, Business Correspondents|
|Become business correspondent of another bank|
List of Payments Bank
|1||Airtel Payments Bank||JV between Airtel & Kotak Mahindra Bank|
|2||India Post Payments Bank||100% Shareholding with GOI|
|3||Paytm Payments Bank||–|
|4||National Securities Depository Limited||–|
|5||Reliance Industries||JV between Reliance Industries & State Bank of India|
|6||FINO PayTech||JV between FINO PayTech & ICICI Bank|
|7||Aditya Birla Nuvo||JV between Aditya Birla Nuvo Ltd & Idea Cellular|
|9||Cholamandalam Distribution Services||License Surrendered|
India Post Payments Bank – Aapka Bank, Aapke Dwaar
Airtel Payments Bank – Bank Hai Par Alag Hai