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.
2. Business Correspondent: Activities encompass deposit acceptance, payment and remittance services, provision of internet banking, and functioning as a business correspondent for other banks.
3. Deposits Limit: Initially, they can accept deposits of up to ₹1 lakh per individual.
4. Fund Transfer: They can provide support for financial transactions such as money transfers, insurance services, and the marketing of mutual funds.
5. Issue Debit Cards Only: Furthermore, they possess the capability to solely provide ATM/debit cards, excluding the option of issuing credit cards.
6. Prohibited from Forming Subsidiaries: They are forbidden from establishing subsidiaries to offer non-banking financial services.
7. Lending Prohibited: They are prohibited from participating in any lending activity.
8. Prohibition Against Loans: Payment Banks are prohibited from granting loans and are ineligible to receive deposits from Non-Resident Indians (NRIs).
9. Minimum Capital: The minimum capital requirement for a payment bank is ₹100 Crore.
Payment Banks in India
Payments Bank was founded on the Nachiket Mor Committee’s suggestions to run on a smaller scale with little credit risk. The goal is to promote financial inclusion by providing banking and financial services to unbanked and underbanked areas, migrant workers, low-income households, small entrepreneurs, etc. They are registered under the Companies Act of 2013 but supervised by the Banking Regulation Act of 1949, RBI Act of 1934, Foreign Exchange Management Act of 1999, Payment and Settlement Systems Act of 2007, and others.
Table of Content
- Features of Payment Banks
- Payment Banks Regulations
- List of Payment Banks in India
- Activities That Can be Performed by Payment Banks
- Activities That Cannot be Performed by Payment Banks
- Difference between Payment Banks and Commercial Banks
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