12.40        ndian    onom
              and after a review, the RBI may liberalise             entities. Even banks can take equity in
              the scope of activities for small banks.               Payments Banks.
          (v) The promoters’ other financial and non-                Payments Banks can accept demand
              financial services activities, if any, should          deposits (only current account and
              be distinctly ring-fenced and not co-                  savings accounts). They would initially be
              mingled with banking business.                         restricted to holding a maximum balance
         (vi) A robust risk management framework                     of Rs 100,000 per customer. Based on
              is required and the banks would be                     performance, the RBI could enhance this
              subject to all     prudential norms and                limit.
              RBI regulations that apply to existing                 The banks can offer payments and
              commercial banks, including                            remittance services, issuance of prepaid
              maintenance of CRR and SLR.                            payment instruments, internet banking,
        (vii) In view of concentration of area of                    functioning as business correspondent for
              operations, the Small Bank would need a                other banks.
              diversified portfolio of loans, spread over            Payments Banks cannot set up subsidiaries
              it area of operations.                                 to undertake NBFC business.
       (viii) The maximum loan size and investment                   As in the case of small banks, other
              limit exposure to single/group borrowers/              financial and non-financial services
              issuers would be restricted to 15 per cent             activities of the promoters should be
              of capital funds.                                      ring-fenced.
         (ix) Loans and advances of up to Rs 25 lakhs,               The Payments Banks would be required
              primarily to micro enterprises, should                 to use the word ‘Payments’ in its name
              constitute at least 50 per cent of the loan            to differentiate it from other banks.
              portfolio.                                             No credit lending is allowed for Payments
          (x) For the first three years, 25 per cent of              Banks.
              branches should be in unbanked rural                   The float funds can be parked only in less
              areas.                                                 than one year G-Secs.
     PAyments bAnks                                              Meanwhile, the RBI has received 72
                                                            applications for small banks and 41 applications
     The objective of payments banks is to increase         for payments banks. The applications are, at
     financial inclusion by providing small savings         present, under consideration of the RBI. It is
     accounts, payment/remittance services to migrant       expected that soon some of them will get the nod
     labour, low income households, small businesses,
                                                            for setting up these niche banks.
     other unorganised sector entities and other users
     by enabling high volume-low value transactions
     in deposits and payments/remittance services in a
                                                               FInancIal InclusIon
     secured technology-driven environment.                 Financial inclusion is an important priority of
              Those who can promote a payments              the government. The objective is to ensure the
              banks can be a non-bank PPIs, NBFCs,          excluded sections, i.e., weaker sections and low
              corporate’s, mobile telephone companies,      income groups, access to various financial services
              super market chains, real sector              such as a basic savings bank account, need-based
              cooperatives companies and public sector      credit, remittance facility, insurance and pension.