CA Pooja Sagar
Recently, the Reserve Bank of India released the list of 11 companies permitting them to set up “Payment Banks”. Airtel, Vodafone, Mukesh Ambani led Reliance, Tech Mahindra, India Post and Paytm were among the 11 companies. The motto behind the notion of payment banks is “a bank for everyone and in every corner of the country”. These banks are expected to reach customers mainly through their mobile phones rather than the traditional bank branches. The telecoms like Airtel, Vodafone will use their network of agents and recharge booths to offer basic banking services. The agents will work as bank correspondents. India Post will use network of its post offices.
The main aim of the RBI by giving license for payment banks is to target rural population, migrant labourers, low income households, small businesses, other unorganized sector entities and other users.
Payment banks can accept the deposits but the maximum limit of acceptance of deposit from an individual is Rs 100,000. They can undertake payment and remittance transactions, issue debit and ATM cards and internet banking. They can work as business correspondents for other banks. They can offer services such as automatic payments of bills and purchases in cashless, chequeless transactions through a phone. One can also transfer money directly to bank accounts at nearly no cost being a part of the gateway that connects the bank. The banks can also offer non-risk financial products like insurance and mutual fund. But such banks have been refrained from lending activities and issuing credit cards.
Apart from maintenance of CRR with the RBI on its outside demand and time liabilities, it will be required to invest maximum 75 per cent of its “demand deposit balances” in Statutory Liquid Ratio eligible government securities/treasury bills with maturity up to one year and hold maximum 25 per cent in current and time/fixed deposits with the other scheduled commercial banks for operational purposes and liquidity management.
India’s remittance market is estimated to be Rs 800-900 billion. Therefore with the advent of payment banks, more money will be pumped into the banking system. It can play a vital role in implementing the government’s direct benefit transfer scheme such as subsidies on education, healthcare and gas which are paid directly to the beneficiaries’ account. It can also help India to achieve its dream of cashless economy. But on the contrary the small banks will face stiff competition on CASA.
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