PAYMENT BANKS :
In order to expedite financial inclusion Finance minister Arun Jaitlely in his budget speech said RBI will create a framework for licensing small Banks and other differentiated banks. Differentiated bank will include local area Bank, payment bank etc. Within a week of the budget , RBI issued guidelines for setting up Small bank and payment bank .RBI in his Guidelines said that payment Bank are niche or Differentiated bank with the common objective of furthering financial inclusion .
Payments banks will get license to collect deposit (initially up to 1 lakh rupees per individual), offer internet banking, sell insurance and mutual funds. Payments banks are stripped-down banks which are expected to reach to the customer through their Mobile phone rather than traditional bank branches.
Main objective of payment bank is to accelerate financial inclusion in the country by providing small saving account and payment/remittance service to migrant labour workforce, low income households, small businesses and other unorganized sectors of the country. Such banks will ensure more money comes to the banking system and will help reach out to people in rural areas of country. Moreover payments bank will include 154000 post offices in country (including 130000 in rural areas) to offer banking services to masses in remote areas of country.
RBI has granted license to 11 entities including big corporates like Airtel, Idea, reliance, Indian post, and many more. Payments banks have limited services as compared to other banks.
They cannot Offer loan but can Accept deposit up to 1 lakh and can pay interest on this as per saving Accounts
They can issue debit card ATM card which can be used on any ATM across the country
They can directly transfer money to other bank's Accounts
They can Provide Forex card to foreign tourists same as ATM card again usable at all the ATM across The country
India is 7th largest economy in the world and 3rd largest in term of purchasing power. The economic growth of Country is the fastest in the world. Still large numbers of people in India do not have access to the bank. Licensing payment banks can be a revolution in banking. Since payment banks are more dependent to mobile technology it will be easy to access payment banks as compare to other banks through mobiles and now days we can find the mobile in every part of India .Thus licensing payment banks is a major steps towards financial inclusion