Payments banks are a new model of banks conceptualized by the Reserve Bank of India (RBI) designed to promote financial inclusion. These banks operate with certain restrictions, notably the inability to issue credit or loans. They focus on accepting deposits and offering basic financial services. Bharti Airtel launched India’s first payments bank named Airtel Payments Bank in January 2017.
Key Features
Deposits:
- Can accept restricted deposits, currently limited to ₹200,000 per customer, with potential for future increases.
Services:
- Cannot issue loans or credit cards.
- Can operate both current accounts and savings accounts.
- Provide ATM cards or debit cards and offer online or mobile banking services.
History
- Formation: On 23 September 2013, the RBI formed the Committee on Comprehensive Financial Services for Small Businesses and Low-Income Households, headed by Nachiket Mor. The committee recommended the creation of payments banks in its final report submitted on 7 January 2014.
- Guidelines: RBI released draft guidelines for payments banks on 17 July 2014 and final guidelines on 27 November 2014.
- Licensing: In February 2015, RBI listed 41 applicants for a payments bank license. An external advisory committee, led by Nachiket Mor, evaluated the applications. On 19 August 2015, RBI issued “in-principle” licenses to 11 entities, valid for 18 months to meet the requirements before commencing operations.
Regulations
- Capital Requirement: Minimum capital requirement is Rs. 100 crore.
- Promoter’s Stake: Promoter’s stake must remain at least 40% for the first five years.
- Foreign Shareholding: Allowed as per FDI rules for private banks in India.
- Voting Rights: Regulated by the Banking Regulation Act, 1949; capped at 10%, potentially increased to 26% by RBI.
- Independent Directors: Majority of the board must be independent directors per RBI guidelines.
- Network Requirements: Must be fully networked from inception and can accept utility bill payments.
- Deposit Cap: Initially capped at ₹100,000 per customer, with potential increases based on performance.
- Lending: Not permitted to lend to any person, including directors.
- Branch Requirements: 25% of branches must be in unbanked rural areas.
- Naming: Must include “payments bank” in their name.
| Bank name | Established | Headquarters |
| Airtel Payments Bank | 2017 | New Delhi, Delhi |
| India Post Payments Bank | 2018 | New Delhi, Delhi |
| Paytm Payments Bank | 2017 | Noida, Uttar Pradesh |
| Jio Payments Bank | 2018 | Mumbai, Maharashtra |
| Fino Payments Bank | 2017 | Mumbai, Maharashtra |
| NSDL Payments Bank | 2018 | Mumbai, Maharashtra |