With the first payments bank seeing the light of day, Airtel Payments Bank was launched on Wednesday, offering an attractive interest rate of 7.25% to customers on their deposits and with the Narendra Modi government looking to bring the benefits of going digital and battling black money menace, on the financial front to even the poorest of the poor through its various initiatives to deepen financial inclusion, this new banking segment promises much, especially after the demonetisation move that banned Rs 500 and Rs 1000 notes. Payments banks gives opportunities to the common man to open bank accounts at nearby retail outlets (sellers/shops) and get access to a number of basic, not all, banking services – this includes cash deposits, opening services and withdrawal facilities. So, without further ado, here are all the facts that you would want to know to participate in the initiative yourself:
1. Payment Banks – Objectives
A new initiative was taken by the Reserve Bank of India (RBI) to expand it’s financial services to niche markets mainly for the small businesses, unorganised sectors, labour workforce and more. On January 2014, the Nachiket Mor committee had submitted its report and as per the recommendations, the formation of a new category of a bank called payments banks came into existence with the primary motive of carrying out transactions electronically in tier 2 and tier 3 cities – in short, going cashless across the country.
2. What are payment banks and how are they different from normal banks?
Modest banks which will serve the need of its customers through mobile phone rather than going to bank branches. These banks will accept deposits and payments will be done in the form of remittances. Normally, they will issue a debit card which can be used in all ATM’s. Unlike other banks, they will not provide any lending activities.
These banks can render following services:-
i) It can help in transferring money from one account to another through payment gateways.
ii) It can help in providing foreign exchange services, forex cards to travellers which can be used in all ATM’s across India.
iii) It can help in auto bill payment facility, cashless transactions.
3. Which other firms or the companies have received licenses from RBI?
Aditya Birla Nuvo Ltd
Airtel M Commerce Services Ltd
Cholamandalam Distribution Services Ltd
Department of Posts
Fino PayTech Ltd
National Securities Depository Ltd
Reliance Industries Ltd
Dilip Shantilal Shanghvi
Vijay Shekhar Sharma
Tech Mahindra Ltd
Vodafone m-pesa Ltd
4. What are some regulations being imposed on payment banks?
i) All the payment banks need to maintain a minimum paid up capital of Rs 100 cr wherein the first 5 years stake of promoters should be a minimum of 40%.
ii) Credit Reserve Ration (CRR) has to be maintained by banks where 75% of the deposits should be made in government securities and maximum 25% of deposits to be maintained with other scheduled commercial banks.
iii) The capping of deposit is restricted to Rs 1 lakh per customer, which can be further raised if required by the RBI.
iv) Banks need to use the term “Payment Banks” under the section 22 of Banking Regulation Act, 2013.
v) Banks cannot form its subsidiaries to engage non-banking activities