contd:-
Now what is payment bank..
What is Payment Bank ?
Nachiket cites the
“case study” of M-Pesa, to strengthen his argument in favour of Payment banks.
1. Objectives
There is a need for
transactions and savings accounts for the underserved in the population. Also
remittances have both macro-economic benefits for the region receiving them as
well as micro-economic benefits to the recipients. Higher transaction costs of making
remittances diminish these benefits.
Therefore, the primary
objective of setting up of Payments Banks will be to further financial
inclusion by providing
(i)
small savings accounts
and
(ii)
payments / remittance
services to migrant labour workforce, low income households, small businesses,
other unorganised sector entities and other users, by enabling high volume-low
value transactions in deposits and payments / remittance services in a secured
technology-driven environment.
2. Registration, licensing and regulations
The Payments Bank will be registered as a public limited company
under the Companies Act, 2013, and licensed under Section 22 of the Banking
Regulation Act, 1949, with specific licensing conditions restricting its
activities to acceptance of demand deposits and provision of payments and
remittance services. It will be governed by the provisions of the Banking
Regulation Act, 1949, Reserve Bank of India Act, 1934, Foreign Exchange
Management Act, 1999, Payment and Settlement Systems Act, 2007, other relevant
Statutes and Directives, Prudential Regulations and other
Guidelines/Instructions issued by RBI and other regulators from time to time,
including the regulations of SEBI regarding public issues and other guidelines
applicable to listed banking companies.
3. Eligibility criteria
The existing non-bank PPI issuers authorised under the Payment
and Settlement Systems Act, 2007 (PSS Act) and other entities such as
Non-Banking Finance Companies (NBFCs), corporate BCs, mobile telephone
companies, super-market chains, companies, real sector cooperatives and public
sector entities may apply to set up a Payments Bank. Even banks can take equity
stake in a Payments Bank to the extent permitted under Section 19 (2) of the
Banking Regulation Act, 1949.
The entities and their Promoters/ Promoter Groups as defined in
the SEBI (Issue of Capital & Disclosure Requirements) Regulations, 2009
should be ‘fit and proper’ in order to be eligible to promote Payments Banks.
RBI would assess the ‘fit and proper’ status of the applicants on the basis of
their past record of sound credentials and integrity; financial soundness and
successful track record of at least 5 years in running their businesses.
4. Scope of activities
Payment Banks means “Digital Wallet or Mobile Currency” which
can be used to book movie tickets, pay utility bills, do shopping etc. Doesn’t
it sound similar to PPI or what existing banks offer? But here is the
difference, the payment banks could be supermarket chain, mobile service
provider, non-banking financial companies, post offices, agri/dairy type
cooperatives etc.
The Payments Bank will be set up as a differentiated bank and
shall confine its activities to further the objectives for which it is set up.
Therefore, the Payments Bank would be permitted to undertake only certain
restricted activities permitted to banks under the Banking Regulation Act,
1949, as given below:
Acceptance of demand deposits, i.e., current deposits, and
savings bank deposits. The eligible deposits mobilised by the Payments Bank
would be covered under the deposit insurance scheme of the Deposit Insurance
and Credit Guarantee Corporation of India (DICGC).
Payments Banks will initially be restricted to holding a maximum
balance of Rs. 100,000 per customer. After the performance of the Payments Bank
is gauged by the RBI, the maximum balance can be raised. If the transactions in
the accounts conform to the “small accounts” transactions, simplified
KYC/AML/CFT norms will be applicable to such accounts as defined under the
Rules framed under the Prevention of Money-laundering Act, 2002.
Payments and remittance services through various channels
including branches, BCs and mobile banking. The payments / remittance services
would include acceptance of funds at one end through various channels including
branches and BCs and payments of cash at the other end, through branches, BCs,
and Automated Teller Machines (ATMs). Cash-out can also be permitted at
Point-of-Sale terminal locations as per extant instructions issued under the
PSS Act. In the case of walk-in customers, the bank should follow the extant
KYC guidelines issued by the RBI.
Features of Payment Banks
1. Payment Banks can
accept demand deposits (only current account and savings accounts) with a
ceiling limit of Rs.1 lakh per customer.
2. Payment Banks will
pay interest at the rate notified by the RBI.
3. Payment Banks can
issue Debit Cards but not credit cards.
4. Payment Banks
cannot engage in lending services i.e. they cannot give loans,
thus phasing out the fear of NPA.
5. The Deposit up to
Rs.1 lakh is insured by the DICGC (Deposit Insurance and
Credit Guarantee Corporation), same as in bank
accounts.
6. Payment banks
cannot involve in any credit risk and can only invest in less than
one year G-Secs or treasury bills.
7. Payment Banks will
charge a fee as commission. This will be the sole earning
for the banks.
8. Payment bank will
also have to maintain CRR (Cash reserve ratio) just like other
Scheduled commercial banks (SBI, PNB, BoB,
Dena, ICICI etc).
to be contd:-