Paytm Payments Bank gets ‘scheduled bank’ status from RBI

Tags: Economics/Business

  • Reserve Bank of India(RBI) has included “Paytm Payments Bank Limited”, a subsidiary of One97 Communications, in the Second Schedule to the Reserve Bank of India Act, 1934.
  • As per RBI Act 1934, banks satisfying the RBI that its affairs are not being conducted in a manner detrimental to the interests of its depositors, are included in the second schedule.
  • Every Scheduled bank enjoys two types of principal facilities: it becomes eligible for debts/loans at the bank rate from the RBI; and, it automatically acquires the membership of clearing house (A clearing house is a financial institution formed to facilitate the exchange (i.e., clearance) of payments, securities, or derivatives transactions.)
  • This will help Paytm to widen its financial services operations. It will also help Paytm to innovate further and bring more financial services and products to the underserved and unserved population in India.
  • Prior to Paytm Payments Bank, India Post Payments Bank had received the scheduled payments bank status from the RBI in 2019 and Fino Payments Bank received the tag earlier this year. 

Payments Bank

  • Payment Banks in India were set up on the recommendation of the Nachiket Mor Committee on Comprehensive Financial Services for Small Businesses and Low Income Households.
  • They are differentiated or niche banks not Universal banks
  • These banks can accept a  deposit,upto ₹200,000 per customer
  • These banks cannot issue loans and credit cards.
  • Both current accounts and savings accounts can be operated by such banks.
  • Payments banks can issue ATM cards or debit cards and provide online or mobile banking.
  • The minimum capital requirement is ₹100 crore.
  • The foreign shareholding will be allowed in these banks as per the rules for FDI in private banks in India.
  • They cannot offer Time and Recurring Deposits  
  • The bank cannot accept NRI deposits .
  • It cannot form subsidiaries to undertake non-banking activities.
  • 25% of its branches must be in the unbanked rural area
  • The banks will be licensed as payments banks under Section 22 of the Banking Regulation Act, 1949, and will be registered as a public limited company under the Companies Act, 2013.
  • Bharti Airtel set up India's first payments bank, Airtel Payments Bank in 2017.
  • Other Payment banks in India are  Airtel Payment Bank, India Post Payment Bank, Fino payment banks , Paytm Payment Bank, NSDL Payment Bank and Jio Payment Bank

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