In an effort to tap millions of unbanked Indians and to bring them into the folds of banking services, Reserve Bank of India (RBI) has granted Payments Bank license to eleven entities. This include the top Indian telecom operators Airtel and Vodafone, India Post from The Department of Posts, Paytm, Reliance Industries, Aditya Birla Nuvo, Cholamandalam Distribution Services, Tech Mahindra, National Securities Depository Limited (NSDL), Fino PayTech and Sun Pharma.
The ‘in-principle’ approval granted will be valid for a period of 18 months, during which time the applicants have to comply with the requirements under the guidelines and fulfil the other conditions as may be stipulated by the Reserve Bank, according to a statement from RBI.
So, what’s Payments Bank? announced by Finance minister during the Union Budget for 2014-15, this Payments Bank will operate as a differentiated bank and can accept demand deposits, remittance services, Internet banking and other specified services. The main purpose of this banks to serve certain niche interests, remittance needs of small businesses, unorganized sector, low-income households, farmers etc. Here what Payments Bank can and cannot do –
- Payments Bank can accept deposits up to Rs 100,000 per customer
- Cannot provide money lending services (so, no loans)
- Can offer mutual funds and insurance services
- Can open both current and savings accounts for customers
- Can issue Debit or ATM cards to customers, but cannot issue a credit card
- Can offer payments and remittance services via ATMs, business correspondents and mobile banking
- Can’t accept deposits from NRI
- Can receive or send remittances from other banks via RTGS / NEFT / IMPS.
Various companies have already started working on their Payments Bank services, as there is an 18months deadline to meet certain conditions as may be stipulated by the Reserve Bank.
“We thank the Reserve Bank of India for granting the payments bank licence to Airtel M Commerce Services Limited. We are confident that this move will play a pivotal role in bringing millions of unbanked Indians into the folds of banking” – commented an Airtel spokesperson.
“The licence will enable it to build on this further and offer a more comprehensive portfolio of banking and financial products and services, accelerating India’s journey into a cashless economy. We remain committed to actualize the government’s vision of financial inclusion by leveraging the reach of mobile technology to service the unbanked and under serviced sections of the society”. commented Sunil Sood, Vodafone India MD and CEO.
With 155,015 post offices across the country, of which 139,144 are in rural areas, India Post seems to be the one who will bring the banking services to the wider community, especially in the rural areas.
“We are very excited about it. We have our own strength in terms of ubiquity which we will be leveraging. We are going to induce digital technology. We are looking for partnership where it will be a win-win situation for all,” commented M S Ramanujan, Member Banking, Postal Services Board.