Jan 2, 2018

What is Payments Bank?



United Nations initiative i.e. financial inclusion is now on Governments main agenda. 

On the recommendations of Nachiket Mor Committee dated 7th January 2014, RBI has granted temporary License to 11 Organisations to operate Payments Bank to target Low income and unbanked population in India. Payments Banks services are limited as compared to existing regular Banks.

The start-up capital required for opening a Bank is much lower as compared to existing Banks. Payments Banks are introduced to cater Banking needs of SME’s, migrant labourers’ and low income Households which are not concealed by the existing Banking system.


Payments Banks must mentioned word Payments Bank along with and restricted to have subsidiaries.


Bank Deposit receipts:
 

Like other existing regular Banks, Payments Banks can accept Deposits from Indian residents and maximum amount per account is restricted to Rs. 1 Lakhs. The Banks pay interests on these Deposit amounts. These balances accumulated should be invested in Government bonds and be deposited with Commercial Banks only.

ATM Facilities:
Payments Banks are allowed to issue ATM cum Debit Cards. These Cards can also be used to withdraw money from other existing regular Bank ATMs across the Country . For international travellers, there is Forex card which is used in Cross Border preferred Currencies.

Net Banking and Mobile Banking:

Payments Banks include Online Banking and Mobile Banking facilities in Accounts. Using these, a Customer can carry online transactions. However the Payments Banks cannot offer only online Banking Services. 
The Payments Banks can also offer online Utility Bill Payments like any other existing regular Bank and more conveniently .

Credit Cards and Loans:

These Banks are not allowed issue Credit Cards or give Loans. For such type of facilities Customers still have to seek service of existing regular Bank or of other Financial Institutions which are already providing these facilities.
Types of Accounts:
1. There is no restriction on income level to open a n Account.
2. There is no minimum balance required in these Accounts .
4. SME’s can maintain Zero maintenance Salary Bank Accounts with Payments Banks to avoid Salaries in cash payments to their employees.

Remittances:

Payments Banks can offer remittances services such as RTGS, NEFT an IMPS at lower charges.

Conclusion:
With the introduction of Payments Banks the Banking reach will further intensify and cover the unbanked particularly in rural parts of India which will boost Government’s Scheme on Digitalisation of India.


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