Payment Banks

Details About PAYMENTS BANK : '''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''' 1). A Payments bank is a type of non-full service niche bank in India 2). On 23rd September 2013, RBI formed a Committee on Comprehensive Financial Services for Small Businesses and Low Income Households under the chairmanship of Nachiket Mor 3). The Nachiket Mor Committee submitted its report on 7th January 2014 recommending the formation of a new category of bank called payments bank 4). On 27th November 2014 RBI released the final guidelines for payments banks 5). 41 entities had applied to the RBI for Payments bank license and an External Advisory Committee(EAC) headed by Nachiket Mor evaluated the applications 6). During the presentation of the Union Budget it was announced that the India Post will use its large network to run payments bank 7). On 19th August 2015 RBI gave in-principle licenses to 11-entities to establish payments bank with a validity period of 18 months. The following are the 11-entities which were granted licenses · Aditya Birla Nuvo · Airtel M Commerce Services · Cholamandalam Distribution Services · Department of Posts · FINO Pay Tech · National Securities Depository · Reliance Industries · Dilip Shanghvi – founder of Sun Pharmaceuticals · Vijay Shekhar Sharma – CEO of Paytm · Vodafone M-Pesa · Tech Mahindra 8). The RBI will consider to grant full licenses under Section 22 of the Banking Regulation Act 1949 after it is satisfied that all the conditions have been satisfied the above entities 9). Payments bank can only receive deposits and provide remittances 10). It cannot carry out lending activities 11). The payments bank targets at · Migrant laborers · Low income households · Small businesses · Unorganized sector entities 12). The minimum capital requirement to establish a payments bank is Rs. 100 crore 13). For the 1st 5 years the stake of the promoter should be 40% minimum 14). The voting rights in payments bank are regulated by the Banking Regulation Act 1949 15). The voting right of any shareholder is capped at 10%, it can be increased to 26% by the Reserve Bank of India(RBI) 16). RBI also regulates any acquisition over than 5% 17). Foreign investments will be allowed in these banks as per the rules of FDI in private banks of India 18). Payments bank can accept utility bills but cannot form subsidiaries to undertake non-banking activities 19). Initially the deposits will be capped at Rs. 1,00,000 per customer but can be raised by the RBI based on the performance of the bank 20). 25% of branches of payments banks should be in the unbanked rural areas 21). A bank will be licensed as ‘Payments bank’ by the RBI under the Section 22 of the Banking Regulation Act 1949 and will be registered as Public Limited Company under the Companies Act 2013.