The Reserve Bank of India (RBI) has announced that India’s first payments bank, which will provide only deposit and payment services without offering loans, will soon be established.
The central bank’s move is in line with the recommendations of an RBI committee headed by board member Nachiket Mor.
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The financial regulator said that the payments banks can commence operations with a capital of just INR50 crore, while full-service banks require an entry capital of INR500 crore.
Speaking on the sidelines of BFSI Conference organized by SBI Capital Markets, RBI deputy governor H R Khan was quoted by PTI as saying, "We are also coming up shortly with what could be payment bank because there is huge potential for financial inclusion with focus on remittances by involving payment system product."
The payment banks will have to comply with all RBI guidelines. The Mor committee had said that existing banks should be allowed to establish subsidiaries to operate payments banks.
However, the committee later explained that payments banks may be formed by converting prepaid payment issuers (PPIs).
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By GlobalDataThe announcement of payments banks is also seen as a step closer towards a differentiated banking licence regime, where the RBI will grant licenses to new lenders to undertake specific banking operations.
While granting in-principle approval for IDFC and Bandhan Financial Services to establish commercial banks in April this year, RBI governor Raghuram Rajan indicated that the central bank would start the process of issuing differentiated banking licences soon.
