Payment Banks :
Reserve Bank of India (RBI) released guidelines for Licensing of Payments Banks. The guidelines will allow mobile firms and supermarket chains, among others, to enter the banking sector. The objectives of payments banks will be to further financial inclusion by providing small savings accounts and payments or remittance services to migrant labour workforce, low income households, small businesses, other un-organised sector entities and other users.
Important Conditions :
1. Large public sector enterprises and big industrial houses are not allowed to establish Payment banks.
2. The minimum capital for payments banks is 100 crore rupees and it should have a leverage ratio of not less than 3 percent that is its outside liabilities should not exceed 33.33 times its net worth (paid-up capital and reserves).
3.Payment Banks will initially be restricted to holding a maximum balance of 1 lakh rupees per individual individual customer. It can issue ATM or debit cards but not credit cards.
4.The promoter’s minimum initial contribution to the paid-up equity capital for payments bank shall at least be 40 percent for the first five years from the commencement of its business.
5.A promoter or promoter group can have a joint venture with an existing scheduled commercial bank to set up a payments bank. But they should have a sound track record of five years period of running businesses.
6.Payment bank cannot undertake lending activities but can distribute the non-risk sharing simple financial products such as mutual fund units and insurance products, etc.
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