Final norms for payment banks next month may announced by RBI in next month

Reserve Bank of India’s (RBI) Deputy Gov­er­nor S S Mundra has said the cen­tral bank plans to announce the final norms on small and pay­ment banks next month.

“We have received com­ments (on the dis­cus­sion paper). Soon, in a month or so, the RBI will come out with the final guide­lines on small and pay­ment banks,” he said while address­ing stu­dents from the Narsee Mon­jee Insti­tute of Man­age­ment (NMIMS) over the weekend.

To deep­en the finan­cial inclu­sion process, and help get more peo­ple under the for­mal finan­cial sys­tem, RBI has moot­ed the idea of small banks and pay­ment banks. It had come out with draft guide­lines ear­li­er and had invit­ed com­ments by August 28.

Mundra sought to dis­miss con­cerns on prof­itabil­i­ty for such banks, say­ing they can earn from a vari­ety of avenues such as charg­ing for trans­ac­tions and through invest­ments in gov­ern­ment bonds.

Once released, these final norms would allow micro-lenders, tele­com play­ers, non-bank­ing finance com­pa­nies (NBFCs) and pub­lic sec­tor under­tak­ings (PSUs) eli­gi­ble to apply for licences once RBI invites appli­ca­tions for the same.

Small banks would pro­vide a whole suite of basic bank­ing prod­ucts such as deposits and sup­ply of cred­it, but in a lim­it­ed area of operations.

Pay­ment banks would offer a lim­it­ed range of prod­ucts such as demand deposits and remit­tances. They would have a wide­spread net­work of access points par­tic­u­lar­ly in remote areas, either through their own branch net­work or through busi­ness cor­re­spon­dents or through net­works pro­vid­ed by others.

Source: Busi­ness Standard