The Reserve Bank of India (RBI) has issued draft guidelines for those seeking a license to set up a payments banks or a small bank, as part of its strategy to boost financial inclusion in the country.

RBI has conditioned a minimum paid up capital of INR1bn ($16.62bn) for the establishment of both payments as well as small banks, of which, the promoter would account at least 40% initially, which will be reduced to 30% within three years.

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Both, payments banks and small banks are "niche" or "differentiated" banks; with the common objective of furthering financial inclusion, the RBI noted in the draft release.

Small banks will offer a comprehensive suite of basic banking products, including deposits and supply of credit, but in a limited area of operation.

Payments banks will deliver a limited range of products, such as acceptance of demand deposits and remittances of funds, but will have a widespread network of access points particularly to remote areas.

The country’s apex bank said that mobile telephone companies, super-market chains, co-operatives, and non-banking financial companies will be eligible to apply for licenses for establishing up payments banks.

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The entities eligible to set up a small bank comprise resident individuals with ten years of experience in banking and finance, companies and societies, NBFCs, micro finance institutions and local area banks.

The RBI has requested all interested parties and general public to express their views/comments on the draft guidelines, which can be sent by 28 August 2014.