As we know all our IG’ ians are tracking the IBPS Guide for 30 days preparation plan to crack the IBPS Clerk Mains 2017. We provide you study notes on daily basis and today we provide you study notes on the topics based on Payment Banks. You may also use it for the upcoming bank exams.
Important Information About Payment Banks in India
Dear Readers, Here we have given the Important Information About Payment Banks in India, which includes the History of Payment Banks, Regulations of Payment Banks and much more, candidates those who are preparing for IBPS, SBI, RBI and all other Banking Competitive exams can use this.
History of Payment Banks:
- 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.
- On 27th November 2014 RBI released the final guidelines for payments banks. 41 entities had applied to the RBI for Payments bank license and an External Advisory Committee(EAC) headed by Nachiket Mor evaluated the applications.
- During the presentation of the Union Budget it was announced that the India Post will use its large network to run payments bank. On 19th August 2015 RBI gave in-principle licenses to 11-entities to establish payments bank with a validity period of18 months.
The following are the 11-entities which were granted licenses:
- Aditya Birla Nuvo
- Airtel M Commerce Services
- Cholamandalam Distribution Services
- Department of Posts
- FINO PayTech
- National Securities Depository
- Reliance Industries
- Sun Pharmaceuticals
- Tech Mahindra
- Vodafone M-Pesa
The RBI will consider to grant full licenses under Section 22 of the Banking Regulation Act 1949 after it is satisfied that all the conditions have been satisfied the above entities.
Payments bank can only receive deposits and provide remittances. It cannot carry out lending activities.
The payment banks targets at
- Migrant laborers
- Low income households
- Small businesses
- Unorganized sector entities
Regulations of Payment Banks:
- The minimum capital requirement to establish a payments bank is Rs. 100 crore. For the first 5 years the stake of the promoter should be minimum 40%. The voting rights in payments bank are regulated by the Banking Regulation Act 1949.
- The voting right of any shareholder is capped at 10%, it can be increased to 26% by the Reserve Bank of India (RBI). RBI also regulates any acquisition over than 5%. Foreign investments will be allowed in these banks as per the rules of FDI in private banks of India.
- Payments bank can accept utility bills but cannot form subsidiaries to undertake non-banking activities. Initially the deposits will be capped at Rs. 1,00,000 per customer but can be raised by the RBI based on the performance of the bank. 25% of branches of payments banks should be in the unbanked rural areas.
- A bank will be licensed as ‘Payments bank’ by the RBI under the Section 22 of the Banking Regulation Act 1949 and will be registered as Public Limited Company under the Companies Act 2013.
Established Payment Banks:
There are four Payments Banks were established under the RBI’s guidelines till now. They are listed below:
- Airtel Payment Banks
- India Post Payment Banks
- Paytm Payment Banks
- Fino Payment Banks
Airtel Payment Banks:
Airtel Payments Bank Limited is a public limited company. It was the first company in India to receive a payments bank license from the Reserve Bank of India. The license was received on April 11, 2016. Headquartered at New Delhi and MD & CEO of this bank is Shashi Arora.
India Post Payment Banks:
The India Post Payments Bank (IPPB) has been recently incorporated as a public sector company under the Department of Posts with 100% GOI equity. On 27 February 2014, India Post opened its first ATM in Chennai.
Paytm Payment Banks:
India’s largest digital wallet firm Paytm has received the final nod from the Reserve Bank of India (RBI). One97 Communications Pvt. Ltd, the company holding company of Paytm will launch its Payments Bank on May 23. Chairman of the bank is Vijay Shekhar Sharma and Headquartered in Noida, Uttar Pradesh.
Fino Payment Banks:
FINO Payments Bank has commenced operations as a payments bank with effect from June 30, 2017 according to the Reserve Bank of India. The FINO PayTech Ltd was one of the 11 applicants which were issued in-principle approval for setting up a payments bank and headquartered in Navi Mumbai.
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