Payments banks are expected to expand the ambit of the banking system in the country. Unlike regular or universal banks, payments banks can accept deposits up to only INR 100,000 and cannot grant loans. They can only deposit their money in government bonds. They can issue debit cards but not credit cards. Other than this they can provide all the services of a normal bank.
Other applicants that have been awarded the licence include Cholamandalam Distribution, Fino PayTech, National Securities Depository and Tech Mahindra. Apart from this, two individuals have also been awarded the licence – Dilip Shanghvi of Sun Pharma and Vijay Shekhar Sharma, promoter of mobile wallet – Paytm, which is partly owned by Chinese retail company Alibaba’s affiliate Ant Financial.
These companies selected will be given in-principle approval for 18 months, after which they will be given licences if they fulfill all conditions stipulated by the RBI.
Payments banks will largely depend on mobile and ATM infrastructure to provide transaction banking services. Opening an account is expected to be like acquiring a pre-paid mobile number.
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