What is Payment Bank

What is Payment Bank

Payment Bank

A Payment Bank is a new services, its typically a bank but without lending. In other words A Payment Bank can accept only deposits. Good example for a Payment Bank is current India Post, already India Post is working as a Payment Bank. But going forward it has to follow the new rules.

Regulation for Payment Bank:

The minimum capital requirement to form PaymentBank is 100 crore. For the first five years, the stake of the promoter should be 40% minimum. Foreign share holding will be allowed in these banks as per the rules for FDI in private banks in India. The voting rights will be regulated by the Banking Regulation Act, 1949. The voting right of any shareholder is capped at 10%, which can be raised to 26% by Reserve Bank of India (RBI). Any acquisition of over than 5% will require approval of the RBI. The majority of the bank's board of director should consist of independent directors, appointed according to RBI guidelines.

The Payment bank should be fully networked from the beginning. The bank can accept utility bills. It cannot form subsidiaries to undertake non-banking activities. Initially, the deposits will be capped at 1,00,000 per customer, but it may be raised by the RBI based on the performance of the bank. The bank cannot undertake lending activities. 25% of its branches must be in the unbanked rural area. The bank must use the term "payments bank" in its to differentiate it from other types of bank. The banks will be licensed as payments banks under Section 22 of the Banking Regulation Act, 1949and will be registered as public limited company under the Companies Act, 2013.

11 New Payment Banks

Aditya Birla NUVO

Airtel M commerce services

Cholamandalam Distribution services

Department of posts

FINO PayTech

National Security Depository

Reliance Industries

Dilip Sanghvi

Vijay Shekhar Sharma

Tech Mahindra

Vodafone M-Pesa