RBI Grants Approval to 11 Companies to Set Up Payment Banks in India
The Reserve Bank granted 'in-principle' approval to 11 entities, including Reliance Industries, Aditya Birla Nuvo, Vodafone and Airtel, to set up payments banks and proposed such licences 'on tap' in future.
The other entities which have been given 'in-principle' approval are Department of Posts, Cholamandalam Distribution Services, Tech Mahindra, National Securities Depository Limited (NSDL), Fino PayTech, Sun Pharma's Dilip Shantilal Shanghvi and PayTM's Vijay Shekhar Sharma.
Payments banks differ from conventional banks as they are not allowed to lend to customers or issue credit cards. They can, however, accept deposits of up to Rs 100K and can offer current and savings account deposits. They can also issue debit cards and offer internet banking.
In 2013, RBI had outlined a need for niche banking in the country and announced that a structure will be put in place to allow differentiated banks serving niche interests, local area banks, and payment banks etc. to meet credit and remittance needs of small businesses, low-income households, farmers and migrant workforce.
Payments banks can take deposits of up to Rs 100,000 and offer simple financial products such as mutual funds and insurance, but will not be allowed to lend. They can set up ATM and issue debit cards, but cannot offer credit cards.
Aditya Birla Nuvo, Tech Mahindra, Vijay Shekhar Sharma (promoter of mobile wallet Paytm), Dilip Shanghvi (MD of Sun Pharma), National Securities Depository Ltd, Fino PayTech and Cholamandalam Distribution Services are the others whom the RBI has granted “in-principle” approval to set up such banks.
A total of 41 firms had applied for the permit, the RBI said, adding “some of the entities, who did not qualify in this round, could well be successful in future rounds.”
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