Page 42 - Banking Finance January 2022

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Y Payment bank; with approval from RBI, can work as a
partner with other commercial banks and also can sell
mutual funds, pension products, and insurance products.

Y Payment banks must use the word "Payment Bank" in
their names to look different from other banks.
Y Payment banks will be allowed to provide internet
banking and mobile banking facility to their customers.
Y Payment banks can become a business representative
of any other bank, but it will have to comply with the
guidelines of the Reserve Bank of India.
Y The payments banks can accept remittances to be sent
to or receive remittances from multiple banks through
payment mechanism approved by RBI, such as RTGS /
NEFT / IMPS.
Y As the commercial banks, the payment banks will also
accept the money of the people as a deposit but the Payment Banks playing to their
limit is fixed, which means the payment banks can
accept deposits up to a maximum of Rs. 1 lakh from a Strengths:-
customer. As Indian payment banks fail to find their revenue dreams,
Y Payment banks; will be entitled to issue ATM or debit most of them are trying to leverage their core strengths to
cards to their customers but cannot issue a credit card. reach the market. For instance, each operator in the
ecosystem is servicing different financial products. Some
Y Payment banks; will be authorised to open both savings
and current accounts of their customers. have enabled PoS transactions or got into FasTAG
partnerships or focussed on utility payments in rural areas.
Y Payment banks cannot provide loans or lending services But these are only a few scattered solutions and not well-
to customers. orchestrated, long-term strategies.
Y Payment banks cannot accept deposits from the Non-
Resident Indians (NRIs). It means; the people of Indian Take, for instance, India Post PB (IPPB). Based on its massive
origin who have settled abroad cannot deposit their presence in 650 districts and among 3.5 crore customers,
money in the payment banks. the IPPB has set up a full suite of banking services and

Y Payment banks will be allowed to make personal strong linkages with all interoperable payment and
payments and receive remittances from the cross settlement systems. It is now focussing on pan-India G2C
border on the current accounts. (government-to-citizen) payments, especially rural DBT
(direct benefit transfer) disbursements under the Pradhan
Y Payment banks will have to deposit the amount in the
form of a Cash Reserve Ratio (CRR) with RBI as other MantriGaribKalyanYojana.
commercial banks do.
Unlike other payment banks, IPPB does not use PoS devices
Y Payment Banks will have to invest a minimum of 75% or issue debit cards. Its local agents - postmen, postwomen
of its demand deposits in government treasury/ or BCs, initiate transactions by taking a customer's
securities bills with maturity up to one year and hold a biometrics and Aadhaar number which are stored in a QR
maximum of 25 %in currents and fixed deposits with card. Unlike debit cards which need personal identification
other commercial banks for operational purposes. numbers (PINs) for payment initiation, QR cards use the QR
Y Payment banks can provide the Facility of utility bill code to scan and pay. In spite of these benefits, the
payments to its customers and the general public. bureaucratic weight has held IPPB back from utilising its full
Y Payment banks can not open subsidiaries to undertake potential and taking digital payments to remote regions, say
Non-Banking Financial Services activities. industry experts.

42 | 2022 | JANUARY | BANKING FINANCE