Gopal Vittal led Bharti Airtel’s payments bank venture Airtel M Commerce Services Ltd has become the first entity to receive final approval from the Reserve Bank of India (RBI) to start a payments bank.
- Delhi based Bharti Airtel will set up the payments bank in partnership with Kotak Mahindra Bank, which holds 9% stake in Airtel M Commerce, a subsidiary of Bharti Airtel.
- Reserve Bank’s in-principle approval was valid for 18 months, during that time RBI had asked applicants to comply with the licensing norms.
- However These Payments Banks are not permitted to lend. Hence, a tie-up with banks will help them source loans for their customers.
All aboutPayments Banks:
- Reserve Bank’s nod to set up non-lending payments banks as part of the financial inclusion drive. Payments banks are targeting migrant labourers, low income households, small businesses, and other unorganized sector entities.
- Customers can deposit only up to Rs 1, 00,000.Payments bank can issue ATM/debit cards but not credit cards. It cannot accept NRI deposits.
- Payments and remittance services through various channels can be done. Customers will be able to buy insurance and mutual funds.
- Initial capital required for a Payments bank is Rs 100 crore
- Promoter’s contribution initially must be 40% for the first 5 years. For foreign holding, it is up to 74% of paid-up capital, on a par with private banks.
- Payment banks must maintain CRR, minimum 75% of demand deposits in government bonds of up to one year and maximum 25% in current and fixed deposits