RBI mulling over Payment bank as recommended by Nachiket Mor Panel

The Reserve Bank of India will soon come up with India’s first payments bank, which will offer deposit and payment services but not provide loans. 
This idea is in line with the recommendations made by the Nachiket Mor committee. The central bank sees huge potential for financial inclusion with focus on remittances by involving payment system product.
As per the RBI, while full-service banks require an entry capital of Rs.500 crore, payments banks can start operations with a capital of just Rs.50 crore since all their money will be invested in safe government securities.
They will be required to comply with all RBI guidelines for commercial banks.
According to the recommendations of Nachiket Mor committee:

  • Permission should be given to existing banks to create subsidiaries to operate payments banks.
  • Payments banks may be created by converting prepaid payment issuers (PPIs). These companies provide cards that customers can use to make payments with the money stored in them. There are 27 PPIs in the country, including Itz Cash Card Ltd, Oxigen Services (India) Pvt. Ltd and Airtel M Commerce Services Ltd.

Entry of payments banks made easier:
In order to expedite the process, the RBI will soon start its differentiated banking licence regime, where the central bank issues licences to new banks to undertake specific banking operations.The apex bank will also issue licences on a continuous basis to qualified aspirants instead of opening the licensing window after long intervals.The payments bank route is important for India Post, which failed to secure a banking licence. RBI Governor Raghuram Rajan said that India Post could begin as a payments bank. All these efforts are being made to promote financial inclusion in India, where more than half of the adult population still does not have access to banking services.
The RBI first introduced a 3-year financial inclusion programme in April 2010 to promote financial inclusion that witnessed banks opening outlets in 200,000 villages. Subsequently, it launched the phase II of the programme for 2013-2016.



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