Payment banks

Payments banks is a new model of banks conceptualised by the Reserve Bank of India (RBI). These banks can accept a restricted deposit, which is currently limited to ₹1 lakh per customer and may be increased further. These banks cannot issue loans and credit cards. Both current account and savings accounts can be operated by such banks. Payments banks can issue services like ATM cards, debit cards, net-banking and mobile-banking. Airtel has launched India’s first live payments bank. Paytm is the second such service to be launched in the country. India Post Payments Bank is the third entity to receive payments bank permit after Bharti Airtel and Paytm. Aditya Birla group earned payments bank permit on 3 March 2017. The minimum capital requirement is ₹100 crore. For the first five years, the stake of the promoter should remain at least 40%. Foreign share holding will be allowed in these banks as per the rules for FDI in private banks in India. The voting rights will be regulated by the Banking Regulation Act, 1949. The majority of the bank’s board of directors should consist of independent directors, appointed according to RBI guidelines The bank should be fully networked from the beginning. The bank can accept utility bills. It cannot form subsidiaries to undertake non-banking activities. The banks will be licensed as payments banks under Section 22 of the Banking Regulation Act, 1949, and will be registered as public limited company under the Companies Act, 2013 The “in-principle” license is valid for 18 months within which the entities must fulfil the requirements. They are not allowed to engage in banking activities within the period.