The Reserve bank of India introduces a new set of banks in the banking sector called Payment banks. It is more useful and concentrates on small business, low income households, and the unorganized sector. Important points to be notes on Payment banks is mentioned below;
1. It is like any other banks, but it operates on a small scale and there is no involvement of credits.
2. For the new categories of bank, small finance bank and payment bank, RBI has issued draft guidelines.
3. It mainly focused on covering customers through smartphones rather than reaching customers in a traditional way.
4. With this payment bank, one can do payments to milk men, newspaper vendor and all domestic purposes. It makes an way of paying money through mobile rather than by cash.
How is it different from other banks ?
It aims to increase our financial support especially through savings accounts and payments services. We can’t issue any form of loan or a credit card with the payment bank. A payment bank has certain restrictions even in the case of a savings account. People can open a savings account including the maximum deposit amount of 1 lakh rupees. Currently, payment banks offers you the similar rate of interest to other regular banks. According to the RBI guidelines, payment banks can’t accept the fixed or recurring deposits.
Scope of activities of Payment banks:
● Issuance of ATM/debit cards
● Not allowed to give loans for customers.
● Customers are not allowed to get credit cards.
● Maximum deposits per individual customer can hold is 1lahks rupees.
● mutual fund units and insurance products, and more distributed which is non-risk sharing simple financial
● It is allowed to invest money only received from the customer’s deposits into government securities.
● Should not accept NRI deposits.
● Payment bank holders are allowed to deposit and withdraw money by ATM or any other service providers.
The RBI guidelines for payment banks:
● 100 crore rupees is the minimum capital requirement.
● The promoters contribution should be at least 40 percentage, for the period of first five years.
● Excess shareholding could be brought down as mentioned below;
● To 40 % by the end of fifth year
● To 30% by the end of tenth year
● To 26% by the end of 12 years since the date of commencement of the business.
● For setting up the FDI for the private banks in India, the similar rules are followed for foreign shareholdings.
● To regulate the voting rights Banking Regulation, 1949.
● Except promoters, other entities are not allowed to have shareholding more than 10 percent.
● It requires approval from the RBI for any acquisition of more than 5 percent.
● The 25% of the payment banks of their branches should place in the unbanked rural areas.
● They should use the term called “Payment banks” in order to differentiate with other banks.
● To handle their customer’s complaints and concerns, the Payment Banks should have a high powered “Customer Grievance Cell”. This was strictly said by the RBI
Will payment banks affect other Main banks?
The main objective of Payment banks is to reach the people in rural areas where Main banking systems are not very effective. This is also to make sure, providing financial assistance to poor and needy people.
As of this working structure, the new set of payment banks will not affect many already existing banks in the cities. The major banks in India use these banks to improve their reach in rural areas and parts of the country. This improves the country’s wealth as well. Moreover some major banks of India have already tied up with the licence holders.
Some of the Payment Banks in India:
Airtel Payment Banks:
It is the largest telecom provider in India and it was launched in January 2017. It started to support the Indian government to achieve the cashless revolution. Anyone can open the savings bank account at any branch with 5lakh+ banking points. Customers can get free personal accident insurance cover of rupees 1 lakhs. The rate of interest will be 3%. It offers you online debit card facilities. Some more features of this bank are, BHIM UPI, QR code scanning, payment to phone number and more.
Indian post payment banks:
It is backed up by the Indian’s post offices. It is a wide network having 1.55 lakh post offices, and over 3lakh employees. If you have a current payment bank as a savings account, it can be changed to a payment bank savings account. Here you can open your payment bank account with zero balance. They also provide money at your door steps and QR code facilities.
Conclusion:
Payment banks are helpful in these pandemic situations. It covers their customers where no large banking sectors can reach. Particularly, rural area people can use this option to make their purchase for all domestic activities. It brings the way to Digital India and will make the payment process very easy and secure your pocket from getting picked.
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