Page 39 - Banking Finance October 017

ARTICLE
PAYMENT

BANKS- YET

ANOTHER

CHALLENGE OR

A SURVIVAL

THREAT

Preamble The payment banks looks to these unbanked people as low
hanging fruits to harvest their first customers.
You would have come to a situation when you need to pay
cash to your house maid, car driver or a milkman because
The Indian Banking system consist of 26 public sector banks,
he or she does not have a bank account. Individuals like him/
her generally send money to family members (who might 25 private sector banks, 43 foreign banks, 56 regional rural
be residing in his native place, a small village) through known banks, 1589 urban co-operative banks and around 93550
rural co-operative banks in addition to co-operative credit
person or by using money order facility. But more and more
institutions. Public sector banks hold nearly 70% market
people like these are becoming mobile phone savvy.
share thereby leaving comparatively much smaller share for
its private peers, thanks to their sovereign ownership, age
India's domestic remittance market is estimated to be about
Rs.800-900 billion and growing. With money transfer made old presence and branch network rather than service qual-
possible through mobile phones, a big chunk of it, especially ity and product innovations. The latest entrant in the field
that of the migrant labour could shift to this new platform. is Payment Banks and Small Finance Banks. This is the first
time in the history of India's banking sector that RBI is giv-
ing out differentiated licences for specific activities.
About the author
How the Payment Banks came to exist-
Rakesh Bhootda
Chief Manager in Central Bank of India ence?
Faculty at Sir Sorabji Pochkhanawala Bankers In Sept 2013, committee on Comprehensive Financial Ser-
Training College, Mumbai vices for Small Business and Low Households- headed by
Education- B.Sc, CAIIB, MBA (Banking & Finance), Nachiket Mor was formed by RBI. Among its various rec-
Certification on SME by IIBF ommendations, it recommended the formation of a new

38 | 2017 | OCTOBER | BANKING FINANCE

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