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

In the recent times, the central bank has also been talking about adopting a differentiated licence regime where different players can specialize in different kinds of banking operations. The establishment of payments banks means that the RBI is slowly inching towards that goal. In fact, RBI governor Raghuram Rajan had also suggested that India Post, one of the 23 applicants to not be given a bank licence in April, could look at entering the sector via the payments bank route. The apex bank had also decided to make the licence issuing process more frequent so as to