Mumbai: Payment banks will be permitted to accept demand deposits, initially restricted to holding a maximum balance of Rs100,000 per individual customer; issue ATM/debit cards, but not credit cards according to the final licensing guidelines issued by the Reserve Bank of India on Thursday.The guidelines permit a large variety of entites from corporate business correspondents (BCs), mobile telephone companies, super-market chains, real sector cooperatives etc. to set up payment banks.
Existing Non-Banking Finance Companies (NBFCs), Micro Finance Institutions (MFIs), and Local Area Banks (LABs) that are owned and controlled by residents can also opt for conversion into small finance banks.The minimum paid-up equity capital for payments banks shall be Rs100 crore and the promoter’s minimum initial contribution to the paid-up equity capital shall at least be 40 per cent for the first five years from the commencement of its business.
Foreign shareholding in would be as per the Foreign Direct Investment (FDI) policy for private sector banks as amended from time to time.Among the don’ts the payment banks will not be allowed to undertake lending activities and apart from maintaining Cash Reserve Ratio (CRR) with the Reserve Bank they will have to invest minimum 75 per cent of its “demand deposit balances” in Statutory Liquidity Ratio (SLR) eligible Government securities/treasury bills with maturity up to one year and hold maximum 25 per cent in current and time/fixed deposits with other scheduled commercial banks for operational purposes and liquidity management. RBI has invited applications till January 16 from those interested in setting up payment banks or small finance banks.
