Under the eligibility criteria, RBI has included telecom companies, supermarket chains, individuals, mobile companies, business correspondents, PSU companies, real-sector cooperatives as promoters of payments banks, while non-banking finance companies (NBFCs), micro-finance institutions (MFIs) and local area banks can convert into small finance banks.
According to the new guidelines, promoters can also choose to have a joint venture with an existing scheduled commercial bank to set up a payments bank but they must have experience for running the business for 5 years. These banks can accept deposit only up to INR 1 lakh per individual, can offer savings accounts, payments/remittance services, ATM/debit cards, and can also distribute financial products like mutual funds and insurance but not credit cards. However, RBI has made it clear that payment banks can’t undertake lending activities.
The small banks can accept deposits and remittances and lending to unserved and underserved sections including small business units but can’t provide loans. According to RBI guidelines, the banks must maintain cash reserve ratio (CRR) and should keep 75 percent of its “demand deposit balances” in Statutory Liquidity Ratio (SLR) and need to hold maximum 25 percent as deposits with other scheduled commercial banks.
Moreover, the guidelines say that the foreign shareholding in the payments bank would be as per the Foreign Direct Investment (FDI) policy for private sector banks and they must have a high-powered Customer Grievances Cell to handle customer complaints.
For licenses in both categories, companies will have to apply by 16 January 2015 and RBI would consider more applications at a later stage.
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