Payments banks

INTRO, MEANING, FEATURES,OBJECTIVES, ADVANTAGES, DISADVANTAGES

1. INTRODUCTION Payment bank is a new form of bank accepted by Reserve B ank of I ndia for making payments. A payment bank is generally a non- full service niche bank in India.

2. MEANING Payment bank is a new model of bank conceptualised by Reserve bank of India. These banks can accept credit but cannot issue loans and credit cards. These banks can accept deposits. It was limited to Rs.95000 per customer. At present the limit per customer is extended upto Rs. 100000.

3. FEATURES It can accept deposit upto Rs.100000 per customer. It can issue debit cards but cannot issue credit cards to its customers. It cannot issue loans to its customers. Such banks can operate savings a/c and current a/c. Payments bank provide services like ATM cards, debit cards, net banking services and mobile banking services too.

4. 6) The customer is given voting rights. 7) No monthly account maintenance. 8) Standard interest on saving is provided to customers. 9) It works completely on digital basis.

5. OBJECTIVES According to RBI, almost 60% of the people of the country are still not connected with banking services. The data says the people with lower income, who live in rural areas work in unorganised sector. Following are the objectives of payment banks: The main objective of setting up of a payment bank is to ensure the financial inclusion to migrant labour work force by providing payments and remittance services.

6. 2. Opening up small saving a/c of small business holder, low income households and workers of unorganised sectors. 3. Increase in government revenue. 4. Timely payments of bills. 5. Trade relations became stronger. 6. E-Trade and E-commerce increases. 7. Liquidity of money also increases. 8. Banking deposits will increase. 9. The economic developments of the company is possible.

7. LIST OF PAYMENT BANKS Out of 41 applications for payment banks RBI approve provisional license to 11 banks. The list of such banks is as follow: Aditya Birla Nuvo Bank Airtel M-commerce Services Limited Chola-mandalam Distribution Services Fino Pay Tech Ltd. India Post

8. 6) National Securities Depository Ltd. 7) Paytm P ayments Bank Ltd. 8) Reliance Industries Ltd. 9) Shri Dilip Shantilal Sanghvi 10) Tech Mahindra Ltd. 11) Vodafone m- P esa ltd. From among the above banks following banks have surrender their license. 1) Chola - mandalam Distribution services ltd. 2) Tech Mahindra Ltd. 3) Shri Dilip Shantilal Sanghvi

9. Following are the active payments banks: Aditya Birla Payment Bank Airtel Payment Bank Paytm Payments Bank Ltd. India Post Payment Bank Fino Pay Tech Ltd. Jio Payment Bank (new) National Securities Depository Ltd.

10. ADVANTAGES 1. Savings of people will increase. 2. Timely payments of bills. 3. Due to payments banks, banking services will increase. 4. The use of E–Commerce will increase for completion of transactions. 5. Time and efforts can be saved. 6. It will help to increase employment ratio. 7. The idel money with people can be utilized for the development of economy.

11. DISADVANTAGES They cannot lend finance to customers. They cannot issue credit cards. They have to invest all their deposits in government bills with less than 1 year maturity. They provide higher rate on saving deposits but cannot give the facility of long term fixed deposits to its customers.

12. 5) They do not provide all services as provided by the traditional banks. 6) Payment banks cannot forms its subsidiary to undertake its non-banking activity.

13. RBI GUIDELINES They must use the term payment bank after its name. E.g. Aditya Birla Payment Bank, Indian Post Payment bank The minimum capital required to start payment bank is 100 crore . F or the first five years, the promoter should remain with 40 % of minimum capital. Foreign share holding is allowed in such banks as per the rules for FDI in private bank in India. 25% of its branches have to be in the unbanked rural areas.

14. The voting rights will be regulated by the Banking Regulation Act,1949. The voting right of any shareholder was kept at 10%. Now which is raised upto 26% by RBI. The majority of bank ' s board of directors consists of individual directors appointed by the RBI guidelines. Initially, the deposit capped at Rs.100000 per customer but it may be raised by RBI based on the perfomance of the bank. Payment banks are not permitted to lend money to any persons including the directors.

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