Everything you need to know about payment banks

The Reserve Bank of India has given payment bank licences to 11 entities, including telcos, Reliance Industries among others. The licences for small finance banks will be given next month, RBI Governor Raghuram Rajan said.

• What are payment banks: Payments banks will provide small savings accounts, payments/remittance services to migrant labour workforce, low-income households, small businesses, other unorganised sector entities and other users, by enabling high volume-low value transactions in deposits and payments/remittance services in a secured technology-driven environment. A payment bank is covered under sections 5 (b) and 6 (1) (a) to (o) of the Banking Regulation Act, 1949.
• How payment banks are different from regular banks: These banks can only receive deposits and remittances but cannot carry out lending activities. Aiming at financial inclusion, these banks will provide banking services to migrant labourers, low income households, etc.
• The payment banks require a minimum paid-up equity capital of Rs 100 crore while normal commercial banks require Rs 500 crore.
• When was the idea floated: The concept of payment banks was first floated by a Reserve Bank of India (RBI) committee led by board member Nachiket Mor. The Committee on Comprehensive Financial Services for Small Businesses and Low Income Households formed in 2013 came out with its report in early 2014.
• Who all applied for payment bank licences: A total of 41 entities had applied for payment bank licences. NSE Strategic Investment Corporation Limited promoted by the National Stock Exchange, MG George Muthoot, Videocon d2h and Kishore L Biyani had also applied but could not win the licence.
• Who all won licences: Aditya Birla Nuvo, Airtel M Commerce, Vodafone m-pesa, Tech Mahindra, Vijay S Sharma of Paytm, Dilip Shanghvi of Sun Pharma, Reliance Industries, NSDL, Fino PayTech, Cholamandalam Dist and Department of Posts.
• When the operations are likely to start: The operations are likely to start much earlier than the 18-month deadline given by RBI. The companies selected will be given "in-principle" approval for 18 months, after which they will be given licences if they fulfil all conditions stipulated by the RBI.
• Customers have a limit of depositing up to Rs 1,00,000 in payment banks.