- Payment bank
- Objectives of the Payments Banks in India
- Benefits of payment banks
- Limitations of payment banks
The payment bank will perform most banking operations, however, cannot advance loans or issue credit cards. It will settle for demand deposits (up to Rs one lakh), supply payment services, mobile payments/transfers/purchases, and alternative banking services like ATM/debit cards, web banking, and third-party fund transfers.
Objectives of the Payments Banks in India
According to the banking concern of India (RBI) information, nearly 60% of the individuals are still not connected with the banking sector. This includes several lower-income people; World Health Organization board rural are of the country, add unorganized sector and infrequently migrate to cities/abroad within the search of employment.
- The main objectives of putting in place of payments banks are to make sure the money inclusion by providing payments/remittance services to the migrant labor force, gap up tiny savings accounts of tiny business holders, low-income households, employees of the unorganized sector.
- Because the industrial banks, the payment banks also will settle for the money of the individuals as a deposit however the limit is mounted, which implies the payments banks will settle for deposits up to a most of Rs. 1 Lakh from a client.
- Payments banks; are going to be entitled to issue ATM or debit cards to their customers however cannot issue a Mastercard.
- Payments banks; are going to be authorized to open each savings and current accounts of their customers.
- Payments banks cannot give loans or disposal services to customers.
- Payments banks cannot settle for deposits from the Non-Resident Indians (NRIs). It means; the individuals of Indian origin World Health Organization have settled abroad cannot deposit their cash within the payment banks.
- Payments banks are going to be allowed to create personal payments and receive remittances from the cross approximate the present accounts.
- Payments banks can deposit the quantity within the type of a money Reserve quantitative relation (CRR) with run as alternative industrial banks do.
- Payments Banks can invest a minimum of seventy-fifth of their demand deposits in government treasury/securities bills with maturity up to 1 year and hold a most of twenty-five you intending to start currents and stuck deposits with alternative industrial banks for operational functions.
- Payment banks will give the ability of utility bill payments to its customers and therefore the general public.
- Payments banks can’t open subsidiaries to undertake Non-Banking money Services activities.
- Payments bank; approvingly from a run, will work as a partner with alternative industrial banks and can also sell funds, pension products, and insurance products.
- Payments banks should use the word “Payments Bank” in their names to appear completely different from alternative banks.
- Payments banks are going to be allowed to produce web banking and mobile banking facility for their customers.
- Payments banks will become a business representative of the other bank, however, it’ll go with the rules of the banking concern of India.
- The payments banks will settle for remittances to be sent to or receive remittances from multiple banks through payment mechanisms approved by the run, like RTGS / NEFT / IMPS.
Benefits of payment banks
- Payment banks are helpful because it supplies zero balance account. meaning there’s no penalty on zero balance in payment banks account.
- Yields in high profits of the banks as there’s no infrastructure price. as an example in the Airtel case, Airtel shops are acting as banking points. India Post to set up a payments bank, and it operates from the current post offices solely.
- High rate of interest is given by the payment banks as compared to industrial banks to draw in deposits.
- Some payment banks are medium distributors and thru their service, you’ll be able to keep your account range the same as your mobile range. this can be convenient for individuals and simple to recollect.
- Right currently there’s cash-back and discount on each group action. as an example, Paytm offers a discount on purchases created through their payment bank.
- Some supplemental advantages of payment banks are accidental insurance, mutual funds.
- It can facilitate individuals of rural area wherever they don’t have access to bank property. currently, they will use their account through their mobile phones.
- They additionally issue debit cards and ATM cards that are usable on the ATM network of all branches.
- These payment banks are joined with one’s banks bank account via IMP and NEFT transfers.
Limitations of payment banks
- Maximum deposits in these payment banks are up to one-lakh solely.
- Payment banks cannot issue loans and credit cards.
- Nowadays payment banks charge some percentage of your amount after you withdraw or transfer cash.
Payment banks are helpful during this digital age, wherever the focus is on cashless payments and the use of digital cash. It’s a step taken by the run to redefine banking in India and government can meet its goal of economic inclusion. These banks target those plenty World Health Organization cannot afford to go to branch anytime and is providing them basic facilities through mobile phones