6 Apr 2018

Payment Banks

Finance feed by:

CA Abhishek Sinha
M.com,CA,CS
CA in Practice    •    16 Year 7 Month  experience

A payments bank is like any other bank, but operating on a smaller scale without involving any credit risk. In simple words, it can carry out most banking operations but can’t advance loans or issue credit cards. It can accept demand deposits (up to Rs 1 lakh), offer remittance services, mobile payments/transfers/purchases and other banking services like ATM/debit cards, net banking and third party fund transfers.

Why payments banks? The main objective of payments bank is to widen the spread of payment and financial services to small business, low-income households, migrant labor workforce in secured technology-driven environment.
With payments banks, RBI seeks to increase the penetration level of financial services to the remote areas of the country.

Existing prepaid payment instruments (PPI model) like Airtel Money does not give pay any interest on deposits.

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