Q. 4. The establishment of 'Payment Banks' is being allowed in India to promote financial inclusion. Which of the following statements is/are correct in this context? - Mobile telephone companies and supermarket chains that are owned and controlled by residents are eligible to be promoters of Payment Banks.
- Payment Banks can issue both credit cards and debit cards.
- Payment Banks cannot undertake lending activities.
Select the correct answer using the code given below. (UPSC Prelims 2016)
Answer:
1 and 3 only
Notes: The correct answer is
[B] 1 and 3 only. Payments Banks were introduced based on the recommendations of the
Nachiket Mor Committee to provide small savings accounts and payments/remit services to migrant labor, low-income households, and small businesses.
- Statement 1 (Correct): To reach the unbanked, the RBI allows various entities to promote Payments Banks. This includes mobile telephone companies (like Airtel or Jio), supermarket chains, corporate business correspondents, and public sector entities, provided they are owned and controlled by residents.
- Statement 2 (Incorrect): Payments Banks are strictly prohibited from issuing credit cards because a credit card is a form of unsecured lending. However, they can issue ATM/debit cards to facilitate cash withdrawals and digital payments.
- Statement 3 (Correct): A defining characteristic of Payments Banks is that they cannot undertake lending activities. They cannot give loans or advances to customers. This minimizes their risk and ensures they focus purely on transaction and deposit services.
Key Features of Payments Banks:- Deposit Limit: They can accept demand deposits (savings and current accounts) up to a limit of 2 lakh per individual customer.
- Investment Mandate: Since they cannot lend, they must invest 75% of their demand deposit balances in Statutory Liquidity Ratio (SLR) eligible Government securities.
- NRI Deposits: They are not allowed to accept NRI deposits.