Payments Bank License


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Uploaded on May 4, 2020

Category Business

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Payments Bank License

Payments Bank License What is Payments Bank?  Payment banks were conceptualized in 2014 by the Reserve Bank of India (RBI).  The banks which can accept a maximum deposit of INR 1,00,000.  However, these banks do not avail the issuance of loans and credit card facilities.  The bank must use the term ‘payment bank’ in its name to differentiate itself from the other banks Features of Payments Bank A maximum deposit Debit card, ATM card, Net-banking Bank can operate of INR 1,00,000 per both current and customer etc. facilities available savings accounts Can establish Feasible modes of outlets such as making payments ATMs and Business Correspondents To create a mechanism To increase and enlarge of payment and financial the financial aid for aid in a technology- labourers, small driven environment, businessmen and the low- which is secure in income households. nature. Basic objectives of Payments Bank To reconstruct, redefine To provide financial and rebuild the Indian support to all the remote Economy with a secure and far-flung villages and payment method for all other areas. sort of transactions. Who can have a Payments Bank License?  Individual Professionals  Telecom Companies  Public Sector Undertakings  Chain Of Supermarkets  Public Companies  Non-banking Financial Companies (NBFC)  Corporate Business Correspondence Procedure to obtain Payments Bank License Incorporate a Application to Validation of Public Limited RBI to grant the Company the license information Creation of bank within 18 Name on RBI License is months website granted ...contd. 1. Incorporate a Public Limited Company: Now, the RBI Regulations say that any person who intends to have a payments bank, must have a public limited company to his name. Therefore, firstly, it is important to incorporate a public legal company 2. Application to RBI to grant license: Next, an application needs to be filed to the Chief General Manager of RBI to grant the license to the applicant. ...contd. 3. Validation of information: In this step, the information given by the applicant in the form of his application is validated by an External Advisory Committee (EAC). The applicant is summoned by the committee and the information is validated. 4. License is granted: If the eligibility criteria is met by the applicant, he is granted the Payments Bank License by the RBI. ...contd. 5. Name on RBI website: As a consequence of the previous step, the name of the applicant shall be displayed on the official RBI website, thus, showing that the respective applicant is now holder of a Payment Bank License. 6. Creation of bank within 18 months: After finally getting a nod from the RBI to operate as a payment bank, the bank has to be set up in 18 months. What should the Payment Banks adhere to?  They are prohibited from accepting NRI deposits.  They cannot render loan or credit cards.  They can accept remittances as a channel.  They must have a minimum capital of 100 crores.  Their customers can avail several internet banking solutions. Future of Payments Banks  A strong system letting you carry out transactions even after having a traditional account.  Transactions can be done at any time.  They provide another apparent benefit of cash digitalization.  Banking on a broader scale. Conclusion Having regard to what has been discussed herein above, it is manifest that, payment banks are a game changer in the field of payment and cash transactions. They surely are the future of cashless transactions and banking in the country.