The unbanked population will have to wait 18 months for the payments banks to start full fledged operations, but they have exciting times to look forward to: a revolutionary change in the way they handle cash in future and the schemes that will be available. In fact, one does not know where the payments banks will lead to as the licensees come out with novel ideas for a cashless society and take electronic transaction facilities to the 300,000 unbanked villages, and even urban and rural areas where banking facilities are not available. Who would have thought in 2006, when the buzz about inclusive banking grew loud, that there would be payments banks?
In the next 18 months, the 11 parties that got licences will have to raise funds and provide the RBI their blueprints for operating branches, new products from just dispersing government funds for the NREGS and pension disbursements, which they have been doing so far, etc. They can provide insurance products and new shopping experiences, may be in tie-ups with e-commerce platforms.
Earlier these payment organisations were just extensions of banks because of their enormous reach, but now all the customers they served, basically as business correspondents, will be theirs. Except for lending, they can even take deposits up to Rs 1 lakh. The scheduled banks are understandably worried and expressed this at a meeting with the RBI governor on Thursday. They feel they will lose depositors to competition from payments banks that can play with interest rates.
