all about payment bank

1. GROUP 2

2. TOPIC OUTLINE
 WHAT IS PAYMENT BANKS?
 OBJECTIVES OF PAYMENT BANKS
 FEATURES OF PAYMENT BANKS
 HOW CAN PAYMENT BANKS EARN?
 BIRTH CONCEPT
 WHAT PAYMENT BANKS CAN &CAN’T DO
 CHALLENGES FACED BY PAYMENTS
BANKS
PLAYERS OF PAYMENT BANKS
 SMALL FINANCE BANKS
 COMPARISON OF PAYMENT BANKS &
SMALL BANKS
 AIRTEL PAYMENT BANK & FEATURES
 SERVICES
 CONCLUSION

3. WHAT IS A
PAYMENT
BANK
 Payments Banks are stripped-
down type of Commercial Banks,
which are expected to reach
customers mainly through their
mobile phones rather than
traditional bank branches.
They are allowed to undertake
only certain restricted banking
functions that the Banking
regulation Act of 1949 allows.

4. RBI in its guidelines states that the objective of
setting up payments banks is to increase financial
inclusion of the underbanked by providing:
Small Saving Account
Payment/Remittance Services
To the migrant labour workforce, low income
households, small businesses, other unorganized
sector entities and other users.
OBJECTIVES OF SETTING UP
PAYMENTS BANKS

5. FEATURES OF PAYMENTS BANKS
 Payments banks can accept deposits from public
with a ceiling limit of INR 1 lakh per customer.
 The initial capital requirement for a payments bank
is INR 100 Crores.
 Payment banks will pay interest on the deposits
made by customers.
 Payment banks can issue debit cards but not credit
cards.
 Payment banks cannot engage in lending services.

6. Deposits of up to INR 1 lakh are insured by the DICGC,
just like those in bank accounts offered by conventional
commercial banks.
 Payment banks cannot involve in any credit risk and
can only invest in government securities of less than 1
year or T-Bills.
 Payment Banks are allowed to charge fees for the
services they provide to customers.
 Payment Banks also need to maintain the cash
reserve ratio just like other conventional commercial
banks.
CONTD.

7. HOW CAN
PAYMENT
BANKS EARN?
• Payment Banks need to deposite 75%
in SLR & remaining 25% deposited
with other commercial Banks.
INTEREST
INCOME
• Payment Banks are not allowed to
lend, they can aid other financial
institution like Commercial banks &
micro finance institution in
analyzing the loan applications
received by them.
CREATE
LARGE-SCALE
ACCESS TO
CREDIT
• They can cross-sell to their
customers & create a marketplace
for financial services.
MARKETING
FOR
FINANCIAL
SERVICES
FEES
• The fees it charge their customers for
providing services like money transfer &
cash withdrawals.

8. BIRTH CONCEPT
OF PAYMENT
BANK
The Payment
Bank came into
existance as a
result of
NACHIKET MOR
Committee.
Officially known
as “Committee on
Comprehensive
Financial Services
for Small Business
and Low Income
Households”
Formed by the
RBI Governor
Raghuram Rajan
on 23rd sep-2013.
The committee
had submitted its
report in January
2014 and had
recommended,
among other
things, setting up
of the Small
banks and
Payment banks.

9. WHAT PAYMENT
BANKS CAN DO &
CAN’T DO
Do’s
 Accept demand deposits
up to INR 1 lakh
 sells Mutual funds,
Insurance & Pension funds
 Use debit cards & also
Internet banking facilities
 Accept remittances to be
sent to or receive
remittances from multiple
banks
 Lend Loans
 Accept NRI deposits
 Set up Subsidiary NBFCs
 Issue credit cards
 Offer other financial or
non-financial services of
promoters
Don’ts

10. CHALLENGES
FACED BY
PAYMENTS
BANKS
Duplication of
Efforts
Acceptance by
The Masses
Competition
from Existing
Banks
The main challenges that Payment Banks could face are:
CHALLENGES

11. PLAYERS OF PAYMENT
BANKS

12. SMALL FINANCE BANKS
Small Finance Banks a type of niche banks.
 The main purpose of the establishment of small finance banks is to
provide. Financial inclusion to the section of the economy such as small
business units, marginal farmers, micro & medium industries and
businesses operating in the unorganized sector.
 Small finance banks need to have a minimum capital of INR 100 Crore.
 Small finance banks can accept deposits and gives loans subject to
certain norms.
 Sell forex to customers.
Sell mutual funds, insurance and pensions.
Can convert into a full-fledged bank.

13. COMPARISION OF PAYMENT BANKS AND
SMALL FINANCE BANKS
SMALL FINANCE BANKSPAYMENT BANKS
Eligible Promoters
OBJECTIVES
Provide small savings accounts and
payments /remittance services to migrant
labour workforce and low-income
households
Financial inclusion and supply of credit to
small business units and farmers through
high-technology and low-cost operations
Individuals or professionals with
necessary experience and eligibility,
existing NBFCs, corporate banking
correspondents, mobile companies,
supermarket chains, real estate co-ops
and corporate entities
Resident individuals or professionals with 10
years of experience in banking and finance,
companies and societies owned and controlled
by residents, existing NBFCs, microfinance
institutions and local area banks owned and
controlled by residents

14. Scope of Activities
Accept deposits but customer balance
should not exceed Rs.1 Lakh
Basic services of accepting deposits and
lending
Cannot give loans, can issue ATM/Debit
card but no credit cards
No restriction on the area of operations
Can distribute non-risk simple financial
products such as mutual funds and
insurance products
At least 50% of its loan portfolio should
constitute loans and advances of up to
Rs.25 Lakh
Capital Requirement and Promoter’s contribution
NRIs will not be allowed to open accounts
Minimum paid-up equity capital of Rs.100 Crore/initially 40%, to be gradually brought
down to 26% within 12 years from date of commencement
CONT..

15. A Payments Bank is a differentiated bank that provides essential financial
services to its customers and is a giant leap towards making financial inclusion a
reality for every Indian.
Bharti Airtel Limited saw this as an opportunity to provide banking in its smartest
and simplest way with its subsidiary Airtel Payments Bank Limited (erstwhile
Airtel M-Commerce Services Limited and popularly known as AMSL).
Airtel Payments Bank is the first entity to get the final licence from Reserve
Bank of India for launching a Payments Bank.
AIRTEL PAYMENT BANK
Type - Public Company
Industry – Financial Services
Founded – 11 April, 2016
Headquarters – New Delhi India
Key People –MD & CEO – Shashi Arora
Parent – Bharti Airtel Limited

16. FEATURES OF
AIRTEL
PAYMENT
BANK
Interest
rates
Minimum
Balance
Charges
Process
Our aim with Airtel Payment Bank is to give every Indian access to an
equal, effective and trustworthy banking experience.

17. SERVICES OF AIRTEL PAYMENT
BANK
Digital Banking: Quick and paperless account opening
using Aadhaar based e-KYC. This requires no documents at
all, only the customer’s Aadhaar number is needed.
Customer’s Airtel mobile number will be his/her bank
account number.
Interest rate of 7.25 % p.a. on deposits in savings
accounts, the highest in India.
Money transfer to any bank account in India (Free money
transfer from Airtel to Airtel numbers within Airtel
Payments Bank).
Personal Accidental Insurance of Rs. 1 Lac with every
Savings Account.
Easy deposit and withdrawal facility across a wide
network of Airtel retail outlets.

18. Individuals can use the payment bank account to make daily or monthly cash
transactions, either through debit card or through mobile.
Since there is no restriction on the income levels of those who wish to open
accounts in payment banks, those who have salary accounts in regular bank
accounts can also open an account in a payment bank.
CONCLUSION
While a full-fledged commercial bank offers all charge fees and also have
stringent Know Your Customer (KYC) norms. In a payment bank, KYC these
services, they norms may be simplified and charges may be lower. Payments
banks will target the non-banking population. So, they might have linient KYC
norms.
Payment banks may also offer a higher rate of interest on savings bank
accounts, in order to attract customers.
Messaging and social technology service provider Hike has
partnered with Airtel Payments Bank to power its mobile wallet.