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.