SCOPE AND OPPORTUNITIES OF PAYMENT BANKS IN INDIA

Payment banks is a new Indian model of banks conceptualized by the Reserve Bank of India (RBI).

- Amit Kumar Bhadani

About the author

Amit Kumar Bhadani Senior Manager STC Kolkata Union Bank of India

Payment banks is a new Indian model of banks conceptualized by the Reserve Bank of India (RBI). These banks can accept a restricted deposit, which is currently limited to Rs. 100,000 per customer and may be increased further. These banks cannot issue loans and credit cards. Both current account and savings accounts can be operated by such banks. Payment banks can issue ATM cards or debit cards and provide online or mobile banking.

Bharti Airtel set up India's first payments bank. On 23 September 2013, Committee on Comprehensive Financial Services for Small Businesses and Low Income Households, headed by Nachiket Mor, was formed by the RBI. On 7 January 2014, the Nachiket Mor committee submitted its final report. Among its various recommendations, it recommended the formation of a new category of bank called payments bank. On 17 July 2014, the RBI released the draft guidelines for payment banks, seeking comments for interested entities and the general public. On 27 November, RBI released the final guidelines for payment banks.

Advantages of Payment Banks:Reach:

Traditional banks due to their structures and business priorities they may be unable to cater to certain segments and geographies. But Payment Banks can reach every corner of the country due to its technology oriented services.

Volume: Payment banks largely deal with low value, high volume transactions like they can accept deposits of only up to Rs 1 lakh. So this low value transactions will be very helpful to migrant workers and particularly women workers