What is a Payment Bank ? 11 New Payment Banks.

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2. PAYMENT BANK
A payments bank is like any other bank, but
operating on a smaller scale without
involving any credit risk. In simple words, it
can carry out most banking operations but
can’t advance loans or issue credit cards. It
can accept demand deposits (up to Rs 1 lakh),
offer remittance services, mobile
payments/transfers/purchases and other
banking services like ATM/debit cards, net
banking and third party fund transfers.
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3. History of Payment Bank
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A payments bank is a type of non-full service
niche bank in India. 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.
The Nachiket Mor Committee submitted its
report on 7th January 2014 recommending
the formation of a new category of bank
called payments bank.

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The key objective of payment bank is
to increase financial inclusion by
offering small savings account and
payment remittance services. The
payment banking would be paperless
as there would be no checks or DD’s.
The payments bank would also
provide good interest rate on your
savings.
What are the objectives of the Payments
Banks in India?

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1.. The minimum paid-up equity capital for
payments banks shall be Rs. 100 crore..
For the first five years, the stake of the
promoter should be 40% minimum.
Foreign share holding will be allowed in
these banks as per the rules for FDI in
private banks in India.
2. The bank should be fully networked
from the beginning. The bank can accept
utility bills. It cannot form subsidiaries to
undertake non-banking activities.
Some Regulations for Payment Banks

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3. Initially, the deposits will be capped
at Rs.1,00,000 per customer, but it
may be raised by the RBI based on the
performance of the bank. The bank
cannot undertake lending activities.
4. 25% of its branches must be in the
unbanked rural area. The bank must
use the term "payments bank" in its
to differentiate it from other types of
bank.
Some Regulations for Payment Banks

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4. The banks must maintain CRR, minimum 75%
of demand deposits in government bonds of up
to one year and maximum 25% in current and
fixed deposits with other scheduled commercial
banks for operational purposes and liquidity
management.
5. The banks will be licensed as payments banks
under Section 22 of the Banking Regulation Act,
1949 and will be registered as public limited
company under the Companies Act, 2013.
Some Regulations for Payment Banks

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1. It is believed that the banking system in India was started
in 1786 after the establishment of the Bank of Calcutta
whereas the payments bank started its operation in
November 2017.
2. The Commercial Banks can accept any amount as deposit
per customer but the payments bank will be restricted to
holding a maximum balance of Rs. 1,00,000 per individual
customer.
What is the difference between payments
banks and commercial banks?

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3. Payments banks are allowed to
issue ATMs or debit cards to their
account holders but they can’t issue a
credit card while there is no such rule
for commercial banks.
4. The initial minimum paid-up
voting equity capital for a
commercial bank shall be 500 crore
rupees while the minimum paid-up
equity capital for payments banks
shall be Rs. 100 crore.

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5. Payment banks can’t give loan
services to the people, while the main
earning of the commercial banks comes
from the loan services only.
6. Payments banks can’t accept deposits
from the NRI persons. It means, the Non
Resident Indians (NRIs) who have settled
abroad can’t deposit their money in the
payments banks while commercial
banks can accept deposits from NRIs.

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These payments banks are expected to play on volumes as they
are likely to romp in to their fold millions of customers who
are currently not within the fold of the formal financial system.
This would lead to large volumes of transactions fetching the
payments banks fees - a charge of even 1 or 2 per cent on a
large volume can be lucrative on normal cash transfers, which
will include government’s direct benefits transfer
programmes. Moreover, new payments banks can also earn
7.0% or so on their investments in government securities.
How These Payment Banks Will Survive,
when they can not lend?

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On 19 August 2015, the Reserve Bank of India gave "in-
principle" licenses to eleven entities to launch payments
banks.
1. Aditya Birla Nuvo (Idea)
2. Airtel M Commerce Services
3. Cholamandalam Distribution Services
4. India Post
5. Fino PayTech
Lists of Payments Banks in India

13. 6. Paytm Payment Bank
7. Jio Payment Bank
8. Vodafone Payment Bank
9. NSDL
10. Tech Mahindra
11. Sun Pharmaceuticals
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