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www.lawofcompounding.net
PAYMENT BANK
A payments bank is like any other bank, but
operating on a smaller scale without
involving any credit risk. In simple words, it
can carry out most banking operations but
can’t advance loans or issue credit cards. It
can accept demand deposits (up to Rs 1 lakh),
offer remittance services, mobile
payments/transfers/purchases and other
banking services like ATM/debit cards, net
banking and third party fund transfers.
www.lawofcompounding.net
History of Payment Bank
www.lawofcompounding.net
A payments bank is a type of non-full service
niche bank in India. On 23rd September
2013, RBI formed a Committee on
Comprehensive Financial Services for Small
Businesses and Low Income Households
under the chairmanship of Nachiket Mor.
The Nachiket Mor Committee submitted its
report on 7th January 2014 recommending
the formation of a new category of bank
called payments bank.
www.lawofcompounding.net
The key objective of payment bank is
to increase financial inclusion by
offering small savings account and
payment remittance services. The
payment banking would be paperless
as there would be no checks or DD’s.
The payments bank would also
provide good interest rate on your
savings.
What are the objectives of the Payments
Banks in India?
www.lawofcompounding.net
1.. The minimum paid-up equity capital for
payments banks shall be Rs. 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.
2. The bank should be fully networked
from the beginning. The bank can accept
utility bills. It cannot form subsidiaries to
undertake non-banking activities.
Some Regulations for Payment Banks
www.lawofcompounding.net
3. Initially, the deposits will be capped
at Rs.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.
4. 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.
Some Regulations for Payment Banks
www.lawofcompounding.net
4. The banks must maintain CRR, minimum 75%
of demand deposits in government bonds of up
to one year and maximum 25% in current and
fixed deposits with other scheduled commercial
banks for operational purposes and liquidity
management.
5. The banks will be licensed as payments banks
under Section 22 of the Banking Regulation Act,
1949 and will be registered as public limited
company under the Companies Act, 2013.
Some Regulations for Payment Banks
www.lawofcompounding.net
1. It is believed that the banking system in India was started
in 1786 after the establishment of the Bank of Calcutta
whereas the payments bank started its operation in
November 2017.
2. The Commercial Banks can accept any amount as deposit
per customer but the payments bank will be restricted to
holding a maximum balance of Rs. 1,00,000 per individual
customer.
What is the difference between payments
banks and commercial banks?
www.lawofcompounding.net
3. Payments banks are allowed to
issue ATMs or debit cards to their
account holders but they can’t issue a
credit card while there is no such rule
for commercial banks.
4. The initial minimum paid-up
voting equity capital for a
commercial bank shall be 500 crore
rupees while the minimum paid-up
equity capital for payments banks
shall be Rs. 100 crore.
www.lawofcompounding.net
5. Payment banks can’t give loan
services to the people, while the main
earning of the commercial banks comes
from the loan services only.
6. Payments banks can’t accept deposits
from the NRI persons. It means, the Non
Resident Indians (NRIs) who have settled
abroad can’t deposit their money in the
payments banks while commercial
banks can accept deposits from NRIs.
www.lawofcompounding.net
These payments banks are expected to play on volumes as they
are likely to romp in to their fold millions of customers who
are currently not within the fold of the formal financial system.
This would lead to large volumes of transactions fetching the
payments banks fees - a charge of even 1 or 2 per cent on a
large volume can be lucrative on normal cash transfers, which
will include government’s direct benefits transfer
programmes. Moreover, new payments banks can also earn
7.0% or so on their investments in government securities.
How These Payment Banks Will Survive,
when they can not lend?
www.lawofcompounding.net
On 19 August 2015, the Reserve Bank of India gave "in-
principle" licenses to eleven entities to launch payments
banks.
1. Aditya Birla Nuvo (Idea)
2. Airtel M Commerce Services
3. Cholamandalam Distribution Services
4. India Post
5. Fino PayTech
Lists of Payments Banks in India
6. Paytm Payment Bank
7. Jio Payment Bank
8. Vodafone Payment Bank
9. NSDL
10. Tech Mahindra
11. Sun Pharmaceuticals
www.lawofcompounding.net
THANKS FOR WATCHING
/lawofcompounding

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What is a Payment Bank ? 11 New Payment Banks.

  • 2. PAYMENT BANK A payments bank is like any other bank, but operating on a smaller scale without involving any credit risk. In simple words, it can carry out most banking operations but can’t advance loans or issue credit cards. It can accept demand deposits (up to Rs 1 lakh), offer remittance services, mobile payments/transfers/purchases and other banking services like ATM/debit cards, net banking and third party fund transfers. www.lawofcompounding.net
  • 3. History of Payment Bank www.lawofcompounding.net A payments bank is a type of non-full service niche bank in India. On 23rd September 2013, RBI formed a Committee on Comprehensive Financial Services for Small Businesses and Low Income Households under the chairmanship of Nachiket Mor. The Nachiket Mor Committee submitted its report on 7th January 2014 recommending the formation of a new category of bank called payments bank.
  • 4. www.lawofcompounding.net The key objective of payment bank is to increase financial inclusion by offering small savings account and payment remittance services. The payment banking would be paperless as there would be no checks or DD’s. The payments bank would also provide good interest rate on your savings. What are the objectives of the Payments Banks in India?
  • 5. www.lawofcompounding.net 1.. The minimum paid-up equity capital for payments banks shall be Rs. 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. 2. The bank should be fully networked from the beginning. The bank can accept utility bills. It cannot form subsidiaries to undertake non-banking activities. Some Regulations for Payment Banks
  • 6. www.lawofcompounding.net 3. Initially, the deposits will be capped at Rs.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. 4. 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. Some Regulations for Payment Banks
  • 7. www.lawofcompounding.net 4. The banks must maintain CRR, minimum 75% of demand deposits in government bonds of up to one year and maximum 25% in current and fixed deposits with other scheduled commercial banks for operational purposes and liquidity management. 5. The banks will be licensed as payments banks under Section 22 of the Banking Regulation Act, 1949 and will be registered as public limited company under the Companies Act, 2013. Some Regulations for Payment Banks
  • 8. www.lawofcompounding.net 1. It is believed that the banking system in India was started in 1786 after the establishment of the Bank of Calcutta whereas the payments bank started its operation in November 2017. 2. The Commercial Banks can accept any amount as deposit per customer but the payments bank will be restricted to holding a maximum balance of Rs. 1,00,000 per individual customer. What is the difference between payments banks and commercial banks?
  • 9. www.lawofcompounding.net 3. Payments banks are allowed to issue ATMs or debit cards to their account holders but they can’t issue a credit card while there is no such rule for commercial banks. 4. The initial minimum paid-up voting equity capital for a commercial bank shall be 500 crore rupees while the minimum paid-up equity capital for payments banks shall be Rs. 100 crore.
  • 10. www.lawofcompounding.net 5. Payment banks can’t give loan services to the people, while the main earning of the commercial banks comes from the loan services only. 6. Payments banks can’t accept deposits from the NRI persons. It means, the Non Resident Indians (NRIs) who have settled abroad can’t deposit their money in the payments banks while commercial banks can accept deposits from NRIs.
  • 11. www.lawofcompounding.net These payments banks are expected to play on volumes as they are likely to romp in to their fold millions of customers who are currently not within the fold of the formal financial system. This would lead to large volumes of transactions fetching the payments banks fees - a charge of even 1 or 2 per cent on a large volume can be lucrative on normal cash transfers, which will include government’s direct benefits transfer programmes. Moreover, new payments banks can also earn 7.0% or so on their investments in government securities. How These Payment Banks Will Survive, when they can not lend?
  • 12. www.lawofcompounding.net On 19 August 2015, the Reserve Bank of India gave "in- principle" licenses to eleven entities to launch payments banks. 1. Aditya Birla Nuvo (Idea) 2. Airtel M Commerce Services 3. Cholamandalam Distribution Services 4. India Post 5. Fino PayTech Lists of Payments Banks in India
  • 13. 6. Paytm Payment Bank 7. Jio Payment Bank 8. Vodafone Payment Bank 9. NSDL 10. Tech Mahindra 11. Sun Pharmaceuticals www.lawofcompounding.net