These banks can start operations with a capital of just Rs 50 crore and will provide services including deposits and payments but cannot give loans
GN Bureau | June 13, 2014
The country could soon get its first payments bank offering services including deposits and payments but excluding credit services, Reserve Bank of India deputy governor HR Khan has said. The idea of rolling out payments banks, to further the goal of financial inclusion, was first mooted by an RBI committee headed by Nachiket Mor which had submitted its report in January.
Payments banks can be set up with a capital base of Rs 50 crore, all of which will be invested in government securities thus reducing the risk element. In comparison, full-service banks, which can also extend loans, require an entry capital of Rs 500 crore, according to RBI guidelines.
According to the recommendations of the Mor panel, payments banks could be created by converting prepaid payment issuers (PPIs) which provide cards that can be used by customers to make payments to the extent of the money stored in them. At present, there are 27 PPIs operating in the country, including Airtel mCommerce Services Ltd., Itz Cash Card Ltd and Oxigen Services (India) Pvt. Ltd.
Read Nachiket Mor interview here
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