RBI has recently been out with a new method of payment known as payments banks. In this method of banking, banks are given authority to accept deposits only up to Rs.1,00,000 per person and they cannot grant loans. Airtel was the first to provide this facility which includes services of ATM cards, debit cards, online and mobile banking. The companies that use this method are registered under section 22 of Banking Regulation Act, 1949 and are listed as public companies under companies act, 2013.
Certain rules and regulations that need to be fulfilled for utilizing these facilities are:
-Minimum capital requirement of Rs.100 crore.
-Promoters are required to hold minimum 40% of the stake.
-There can be no subsidiaries for non-banking financial activities.
-There can be no lending activities taken up by the bank.
-25% of the bank’s branches should be in rural areas and must use the term “payments banks” to differentiate it from others.
Thus according to my opinion, payments bank should not be encouraged as firstly, it requires many conditions to be fulfilled and secondly, only depositing is allowed while during emergency money cannot be withdrawn and even the deposits are restricted to Rs.1,00,000. Thirdly, one of the major sources of income for banks is from the interests that they charge on loans and the payments bank does not allow this primary function.
By Smit Doshi