Successful applicants for the payments bank licence are lobbying with the Reserve Bank of India (RBI) to increase the limit of Rs 1 lakh per customer on the grounds that this could lead to 'reverse financial exclusion'. In a meeting with the central bank on Thursday, the applicants said that there are several instances where those without access to banking services might end up being excluded because of having funds in excess of the Rs 1-lakh limit.
Applicants are also pushing for some flexibility in investing part of their deposit in money market instruments so that they can have a better yield with liquidity. However, the RBI is worried that granting payments bankspermission to invest in high-yield instruments could trigger a rate war between them and commercial banks.
Meanwhile, the applicants are looking at coming together and forming an association so that the industry can come up with common standards and there is some sharing of resources at the last mile for cost reduction. The central bank is supportive of shared infrastructure and wants interoperability among the payments banks so that there is enough efficiency in the system. In Thursday's meeting, the applicants said that there are several rural areas in India where rich farmers are forced to hold their wealth in cash because the nearest bank is a long distance away. In many cases, there are government officers on deputation to remote areas who have the income but no access to banking services, they said.
RBI guidelines on payments banks state that since their primary role is to provide payments and remittance services and demand deposit products to small businesses and low-income households, payments banks will initially be restricted to holding a maximum balance of Rs 1,00,000 per customer. Of the deposits raised, 75% have to be invested in government bonds and 25% in deposits with commercial banks.
Although it is two months since the RBI granted in-principle approval to payments banks, many of them have not made much headway. The ones who have been granted a licence are Aditya Birla Nuvo, Airtel M Commerce, Cholamandalam Distribution Services, Department of Posts, Fino PayTech, National Securities Depository, Reliance Industries, Dilip Shantilal Shanghvi, Vijay Shekhar Sharma, Tech Mahindra and Vodafone m-pesa.
Although it is two months since the RBI granted in-principle approval to payments banks, many of them have not made much headway. The ones who have been granted a licence are Aditya Birla Nuvo, Airtel M Commerce, Cholamandalam Distribution Services, Department of Posts, Fino PayTech, National Securities Depository, Reliance Industries, Dilip Shantilal Shanghvi, Vijay Shekhar Sharma, Tech Mahindra and Vodafone m-pesa.
Source:-The Times of India
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