Not too worried about firms opting out of payments banks: Raghuram Rajan | business | Hindustan Times
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Not too worried about firms opting out of payments banks: Raghuram Rajan

business Updated: Jun 07, 2016 14:33 IST
Raghuram Rajan

Reserve Bank of India (RBI) Governor Raghuram Rajan during announcing the first bimonthly monetary policy statement at the RBI headquarters in Mumbai. (Photo by Kunal Patil / Hindustan Times)(Hindustan Times)

The Reserve Bank is “not overly perturbed” with some of the companies opting out of setting up payments banks after receiving the licence, governor Raghuram Rajan said on Tuesday.

Three firms dropped the plan after the central bank in August gave in-principle approval to 11 companies to set up the banks primarily aimed at giving access to banking services to those at the lower end of the income scale and also in remote areas.

Tech Mahindra announced its decision on May 25 a week after Sun Pharma promoter Dilip Shanghvi, who had joined hands with IDFC Bank and Telenor venture, abandoned the plan.

Earlier in March, Cholamandalam Finance, too, had backed out.

“We gave out licences to anybody we thought had the appropriate qualifications to run a payments bank… After doing further analysis and seeing who are the other players that are coming in, some of them have decided to back out...We are not overly perturbed after analysis that they would not go forward,” Rajan said during the second bi-monthly monetary policy announcement for 2016-17.

These banks would work particularly well for entities with good customer reach and a base of operations such as mobile-phone companies.

People should acknowledge there was cost involved for the assessor to go through the applications as they had to seek information from the government, Rajan said. Therefore, applications should devote more time and do due diligence before seeking a licence, he said.

A payment bank is allowed restricted banking functions. It can collect deposits but cannot lend. It can issue ATM and debit cards but not credit cards.