Activities That Can be Performed by Payment Banks

Features of Payment Banks

1. Limited Banking Function: A payment bank is a distinct type of bank that exclusively carries out the specific banking functions permitted by the Banking Regulation Act of 1949....

Payment Banks Regulations

The required minimum capital is ₹100 crore. The promoter’s interest should stay at least 40% over the first five years. Foreign shareholding in these banks will be permitted under India’s FDI guidelines for private banks. The Banking Regulation Act of 1949 will govern voting rights. The voting rights of any shareholder are limited to 10%, which the Reserve Bank of India might increase to 26%. 25% of its branches must be located in underserved rural areas. To distinguish itself from other types of banks, the bank must use the term “payment bank” in its name. Under Section 22 of the Banking Regulation Act of 1949, the banks will be licenced as payment banks and registered as a public limited company under the Companies Act of 2013....

List of Payment Banks in India

Name of Bank Headquarters Date of Establishment Features Owned By Airtel Payment Bank New Delhi January 2017 Joint venture between Bharti Airtel and Kotak Mahindra Bank Anubrata Biswas Fino Payment Bank Mumbai, Maharashtra April 2017 Promoted by Fino Paytech, ICICI Group, and Bharat Petroleum Rishi Gupta India Post Payment Bank New Delhi September 2018 Operated by the Department of Posts, Ministry of Communications J. Venkatramu Paytm Payment Bank Noida, Uttar Pradesh 2017 Operates under One97 Communications, the parent company of Paytm Vijay Shekhar Sharma NSDL Payment Bank Mumbai, Maharashtra Oct 2018 Promoted by National Securities Depository Limited Mr Ashutosh Singh Jio Payment Bank Navi Mumbai, Maharashtra 2018 Joint venture between Reliance Industries and State Bank of India Reliance Industries (70%) State Bank of India (30%)...

Activities That Can be Performed by Payment Banks

1. Deposits: Payment banks accept ₹2,000,000 deposits. It accepts savings and current account demand deposits....

Activities That Cannot be Performed by Payment Banks

1. Payment Bank Can Not Lend: Payment banks cannot lend since they have an RBI ‘differentiated’ bank licence....

Difference between Payment Banks and Commercial Banks

Basis Payment Banks Commercial Banks Scope of Activities Payment banks typically concentrate on offering basic financial services, such as receiving deposits and carrying out money transfers. They are prohibited from providing loans or issuing credit cards. Payment banks aim to facilitate financial inclusion by targeting individuals and communities that do not have access to traditional banking services or have limited access to them. Commercial banks provide diverse financial services such as deposit acceptance, loan provision, credit card issuance, and a variety of investment products. Payment banks have a narrower range of activities in comparison to them. Ownership and Regulation Payment banks are subject to regulation by the central bank or financial regulatory authorities of the country. Ownership of the entity might be either private or corporate. Commercial banks have diverse ownership arrangements, like private, public, or a hybrid composition. They are governed by extensive rules to preserve stability and safeguard the interests of customers. Interest Rates Payment banks typically provide interest on deposits, but at potentially lower rates compared to commercial banks. Their money is generated by collecting fees and charges on transactions. Commercial banks provide a variety of interest rates for deposits and loans, which vary based on the specific account or loan. They create revenue through the interest spread, which is the difference between the interest accrued on loans and the interest disbursed on deposits. Credit Card They are prohibited from issuing credit cards They can issue credit cards Primary Focus The main emphasis is on the transfer of funds and remittances. Remittances offering is not the main focus of Commercial banks Balance Limits The maximum balance limit is ₹1 lakh in savings account. There is no limits on deposit account balances....