The RBI on Thursday outlined the operational guidelines for payments banks and set the minimum capital requirement at 15%, with core capital requirements at 7.5% and secondary capital requirements at 7.5%. Eleven companies were given licences in February 2015 to operate as payment banks. Since then, three players have dropped their plans, raising questions about the profitability and operational structure and creating the need for separate operating guidelines for these entities.
Payments banks, which are deemed as RBI’s move to encourage financial inclusion, can accept deposits of up to Rs 1 lakh per customer account but cannot issue loans and credit cards.
These institutions can issue ATM cards and debit cards and offer services such as online banking and mobile banking.
“These guidelines give us the flexibility to craft a digital model for a large customer base and also differentiate. Some of these will evolve with time, but as of now, this is certainly the way ahead and gives us more clarity,” Paytm Payments Bank CEO Shinjini Kumar said.
Under the operating guidelines, the RBI has set a framework for the banks’ investments and said the firms must maintain a minimum investment of not less than 75% of its demand deposit in government securities and treasury bills with maturity of up to one year.
The banks will also maintain balances in demand and time deposits with other scheduled commercial banks, which shall not be more than 25% its demand deposits as on three working days prior to that day.
The banks will need approval from the RBI for opening branches or ”access points” during the first five years of operation. The first of such plan will be submitted to the RBI before commencement of business. After the initial stabilisation period of five years, and after a review, the central bank may liberalise the requirement of prior approval.