Page 32 - Banking Finance February 2018

ARTICLE

further financial inclusion by providing (i) small savings & time liabilities, it will be required to invest minimum 75
current deposit accounts and (ii) payments/remittance per cent of its "demand deposit balances" in Statutory
services to migrant labour workforce, low income Liquidity Ratio (SLR) eligible Government securities/
households, small businesses, other unorganised sector treasury bills with maturity up to one year and hold
entities and other users. maximum 25 per cent in current and time/fixed deposits
with other scheduled commercial banks for operational
Eligible promoters : purposes and liquidity management.
1) Existing non-bank Pre-paid Payment Instrument (PPI)
issuers; and other entities such as individuals / Capital requirement :
professionals, Non-Banking Finance Companies (NBFCs), The minimum paid-up equity capital for payments banks
corporate Business Correspondents(BCs), mobile shall be Rs. 100 crore. The payments bank should have a
telephone companies, super-market chains, companies, leverage ratio of not less than 3 per cent, i.e., its outside
real sector cooperatives, that are owned and controlled liabilities should not exceed 33.33 times its net worth (paid-
by residents; and public sector entities may apply to set up capital and reserves).
up payments banks.
2) A promoter/promoter group can have a joint venture Promoter's contribution:
with an existing scheduled commercial bank to set up a The promoter's minimum initial contribution to the paid-up
payments bank. However, scheduled commercial bank equity capital of such payments bank shall at least be 40
can take equity stake in a payments bank to the extent per cent for the first five years from the commencement of
permitted under Section 19 (2) of the Banking its business.
Regulation Act, 1949.
3) Promoter/promoter groups should be 'fit and proper' Foreign shareholding:
with a sound track record of professional experience or The foreign shareholding in the payments bank would be as
running their businesses for at least a period of five years per the Foreign Direct Investment (FDI) policy for private
in order to be eligible to promote payments banks. sector banks as amended from time to time.

Scope of activities : Other conditions :

1) Acceptance of demand deposits. Payments bank will
1) The operations of the bank should be fully networked
initially be restricted to holding a maximum balance of
and technology driven from the beginning, conforming
Rs. 100,000 per individual customer.
to generally accepted standards and norms.
2) Issuance of ATM/debit cards. Payments banks, however,
2) The bank should have a high powered Customer
cannot issue credit cards.
Grievances Cell to handle customer complaints.
3) Payments and remittance services through various
channels.
4) BC of another bank, subject to the Reserve Bank
guidelines on BCs.
5) Distribution of non-risk sharing simple financial products
like mutual fund units and insurance products, etc.

Deployment of funds :

1) The payments bank cannot undertake lending activities.
2) Apart from amounts maintained as Cash Reserve Ratio
(CRR) with the Reserve Bank on its outside demand and

32 | 2018 | FEBRUARY | BANKING FINANCE

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