Payment Banks, the most talked about term that is on rounds these days. Most of the people are still thinking about it and want to know more about it. We are here with 5 basic yet important things that you should know about Payment Bank that would hopefully clear the doubts of many people. Here we go.
1. Payment Bank
Payment bank is basically same as bank and the only difference is that it operates on a small scale only. This bank was introduced by RBI in the year 2014 in order to support
- Developing sector of the Indian economy.
- Low-income holders
- Migrating work force
- People holding small saving account.
- Small-sized businessman
2. Services That Payment Bank Provides:
This bank accepts limited deposit of Rs 1 lakh and pay interest rate just like the interest of savings bank account.
- Mobile-banking simplifies money transfer and remittances
- Pay bills and make digital payments via Mobile
- Debit and ATM card provided to access money transactions.
- No loan or credit card service provided by this bank.
- Already existing non-banking sector that issues Pre-paid payment instrument
- NBFC, Non-Banking Finance Companies (NBFCs),
- Business Correspondents (BCs),
- Telcom companies,
- Chains of Super-market
- Real-estate sector
- Public-sector entities
- Make sure Minimum capital required to start bank is Rs 100 crore.
- According to RBI, approx. 25% of branches of Payment Bank would adhere to rural areas that have no banking facility.
- FDI allowed for private banks.
4. License Holders
RBI has given permission and even licensed to the below listed companies and they can no start payment bank:
- Fino PayTech Ltd
- Department of Posts
- Cholamandalam Distribution Services Ltd-given license but surrendered
- Airtel M Commerce Services Ltd
- Aditya Birla Nuvo Ltd
- Reliance Industries Ltd
- Vodafone m-pesa Ltd
- Vijay Shekhar Sharma
- Tech Mahindra Ltd- given license but surrendered
- Sun Pharmaceuticals- given license but surrendered
- National Securities Depository Ltd
- Dilip Shantilal Shanghvi
Surprisingly, Airtel became the first company to get this license in the year 2011.This Payment bank was officially launched by our Honorable Finance Minister Arun Jaitley on January 12, 2017.
5. Importance Of Payments Banks:
- This system would improve banking experience of the people in unbanked rural areas.
- Promote financial inclusion.
- Educate people who are not using banking as one of the means to transfer cash and are still dealing in hard card.
- You just need to have a mobile coverage and your bank is ready to serve you.
- Customers would start shifting cash to Digital cash.
- India is a big market for people who use mobile phone, migrating labor force, and people who send money to their home. Payment Bank would help such people in one or the other way.
- This system would definitely promote direct benefit transfer scheme launched by the government. Here, subsidies on education, gas, and healthcare are remitted direct to the beneficiary account.
Above are the 5 important things that you should know about Payment banks. Hopefully, you find this information useful and consider it while looking for basic information about Payment banks.