The Reserve Bank of India (RBI) has given ‘‘in-principal’’ approval for the creation of 11 new payment banks, in an attempt to improve financial inclusion within the sector.
The payment banks will be allowed to take deposits of up to Rs 1 lakh (£977), as well as the ability to issue debit and ATM cards, and facilitate online transactions, but are not allowed to lend money.
In August 2013, RBI released a discussion paper entitled Banking Structure in India – The Way Forward.
The paper aimed to establish building blocks for the ‘‘reorientation of the banking structure with a view to addressing various issues such as enhancing competition, financing higher growth, providing specialised services and furthering financial inclusion.’’
The RBI committee found that the best way to promote financial inclusion was to allow the creation of payments banks in order to establish a ‘‘ubiquitous payment network and universal access to savings.’’
In an official statement, the RBI confirmed that it received 41 applications in total from companies that wanted to set up payment banks, but has so far given in-principle approval to 11 companies, including:
- Aditya Birla Nuvo Limited
- Airtel M Commerce Services Limited
- Cholamandalam Distribution Services Limited
- Department of Posts
- Fino PayTech Limited
- National Securities Depository Limited
- Reliance Industries Limited
- Shri Dilip Shantilal Shanghvi
- Shri Vijay Shekhar Sharma
- Tech Mahindra Limited
- Vodafone m-pesa Limited
These companies now have 18 months to meet RBI’s regulations before getting full licenses.
India has over 870m mobile users, but only 450m bank account holders. The RBI says that the ‘‘selected applicants have the reach and the technological and financial strength to service hitherto excluded customers across the country.’’
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