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How Payments Banks are Different From Commercial Banks: 10 Facts

The Reserve Bank on Wednesday selected 11 companies to help set up payments banks in the country. These payment banks will help provide basic banking facilities in the country, where less than half the adult population has a bank account. Mobile operators Bharti Airtel and Vodafone India, Reliance Industries, outsourcer Tech Mahindra, department of posts and mobile wallet services provider Paytm are among those selected to start payments banks.
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How Payments Banks are Different From Commercial Banks: 10 Facts
The Reserve Bank on Wednesday selected 11 companies to help set up payments banks in the country. These payment banks will help provide basic banking facilities in the country, where less than half the adult population has a bank account. Mobile operators Bharti Airtel and Vodafone India, Reliance Industries, outsourcer Tech Mahindra, department of posts and mobile wallet services provider Paytm are among those selected to start payments banks.
 

Here are 10 things to know about payments banks

1) Payments banks will cater to migrant labour workforce, low income households, small businesses, other unorganised sector entities and other users.

2) Payments banks can take deposits. Deposits up to only Rs 1 lakh per person are allowed currently. They can issue ATM or debit cards.



3) Payments banks cannot give loans or issue credit cards.

4) Customers who do not have the means to maintain minimum balance will be welcomed into payments banks as revenue will be earned through transaction charges and not on the spread of interest between deposits and loans.

5) Payments banks can sell financial products like mutual fund units and insurance policies.

6) Money collected from depositors can be invested either in government bonds or can be deposited with other commercial banks.

7) Payments banks will allow last mile connectivity; they will make banking available in remote areas that are not serviced by bank branches currently. For this, payments banks are expected to piggy-back on their existing retail or other networks.

8) The operations of the payments banks will be fully networked and technology driven from the beginning.

9) The payments banks will also have a high-powered customer care cell to handle customer complaints.

10) The minimum paid-up equity capital for payments banks is Rs 100 crore. This means owners of payments banks have to put in a minimum of Rs 100 crore in return for equity in the company.



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