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PYQ 1200 Q/A Part - 1
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Kerala PSC Indian Economy Book Study Materials Page 364
Book's First Page12.40 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.