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Payments banks can accept deposits up to Rs 1 lakh as RBI issues guidelines
MUMBAI: Payments banks can accept savings and current deposits up to Rs1 lakh and only give loans to its own employees, said the Reserve Bank of India on Thursday.
MUMBAI: Payments banks can accept savings and current deposits up to Rs1 lakh and only give loans to its own employees, said the Reserve Bank of India on Thursday. However, they can tie up with existing commercial banks to accept deposits in excess of Rs 1 lakh.
Releasing guidelines to start operations for payments banks (PBs) and small finance banks (SFBs), the RBI said, “PBs can accept only savings and current deposits. The aggregate limit per customer shall not exceed Rs1 lakh, but can have arrangements with other scheduled commercial banks for deposits over Rs1 lakh … payments banks will not be permitted to lend to any person including their directors. However, payments banks may lend to their own employees out of the bank’s own funds, as per a board-approved policy outlining the caps on such loans.”
Small finance banks (SFBs) will have to offer interest rates based on marginal cost of funds based lending rate (MCLR) as is the case for the existing commercial banks and are required to have 25% of their branches in unbanked rural centres within one year from the date of commencement of operations.
The guidelines for SFBs state that 75% of their loan portfolio must go towards the priority sector and at least half of the loans must be below Rs 25 lakh.
The small finance banks need to keep an arm’s length from business correspondents while dealing with companies owned by their business partners and their own group companies.
MFIs and NBFCs that have obtained permission to set up small finance banks should be given three years to close or convert their existing branches into banking outlets to facilitate an orderly transformation, an RBI panel said.
Of the 10 entities that got in-principle approval from RBI for small finance banks (SBFs), eight are micro finance institutions (MFIs) and one is an nonbanking financial company (NBFC). They have a large number of offices for reaching the underserved segment.
Draft operating guidelines were issued for SFBs and PBs after in-principle approvals were granted in August and September 2015 to 11 applicants to set up payments banks and 10 applicants to set up SFBs, respectively, within 18 months.
Payments banks will be allowed to issue ATM/debit cards and other prepaid payment instruments, but not credit cards.
Till five years, they will need RBI permission to open physical access points after which a review by the RBI will liberalise the approval process.
They will also have to maintain a minimum investment of 75% of its deposit balances.
Among 11 entities that received in-principle licence to set up payments banks, three entities — Tech Mahindra, Cholamandalam Investment and Finance Company and a joint venture of Dilip Shanghvi, IDFC Bank and Telenor Financial Services — have opted out of the race.
