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Small Bank Payment

Topic Name
Small Bank Payment

Small Bank Payment


Introduction:RBI will create a framework for licensing small banks and other differentiated banks.
Differentiated banks serving niche interests, local area banks, payment banks etc. are
contemplated to meet credit and remittance needs of small businesses, unorganized sector, low
income households, farmers and migrant work force.
Payment banks are created primarily to make having banked accounts easier. In November

2014 the proposal was first brought up and accounted for and on 19th August the Reserve bank
of India (RBI) gave an in- principal approval to eleven of applicants which wanted to pursue this
idea. Reliance industries, Vodafone and Airtel are some of the companies
which bagged the opportunity . With payment bank, if we put in simple terms

transaction of money becomes such simpler such as like using Paytm or m-Pesa. It would be
like carrying an e-wallet for easy use by customers.

Customers can deposit a maximum of 1 lakh rupees in their payment bank. It might seem a
very small amount for bank users but as this scheme aims for the easy creation of bank accounts
for customers, this policy gels well. The payment bank can be used both as a savings account and
current account. It would facilitate easy transfer of money from cities to small towns or
villages. What it ultimately helps in doing is that even very small monetary transaction
could be made with the help of this account without carrying money in our wallets which
reduce many security issues.
This payment banks has the facility where customers can deposit money and interest would be
given on it. This makes it even more lucrative. Further ATM cards and debit cards can be issued
on it and the money deposited is allowed to be invested in government securities. However, it
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Small Bank Payment


does not the issue of credit cards or does it accept NRI money which is conducive with its
ultimate goal of creating account facilities that everyone will be comfortable using. The contract
has been given to the above-mentioned phone companies primarily due to their wider reach even
in the interiors of the country so that consumers will have accessibility to it. No doubt this piece
of technology will make the monetary transaction easier.
Background to Payment Banks in India:The term Payment Banks is new and seems to have been invented in Indian context. In
September 2013, a Committee on Comprehensive Financial Services for Small Businesses and
Low Income Households, headed by Nachiket Mor, was formed by the RBI.

By January 2014,

the Nachiket Mor committee submitted its final report and one of its recommendations was the
formation of a new category of bank called payments banks.
The above was followed by announcement in Union Budget 2014-2015 (presented on July 10,
2014) wherein it was decided that After making suitable changes to current framework, a
structure will be put in place for continuous authorization of universal banks in the private sector
in the current financial year. RBI will create a framework for licensing small banks and other
differentiated banks. Differentiated banks serving niche interests, local area banks, payment
banks etc. are contemplated to meet credit and remittance needs of small businesses, unorganized
sector, low income households, farmers and migrant work force.
Taking cues from the Budget, RBI issued the draft guidelines in July 2014 itself on payments
banks and small banks as differentiated or restricted banks. Based on the feedback RBI came

Small Bank Payment


out with final guidelines for Payment Banks in November 2014, and called the applications from
entities which are interested to start such banks.
Objective of Creating Payment Banks in India:We can sum up the objectives in one sentence that these banks have been created to help India
reach its financial inclusion targets. This type of bank can be highly useful for migrant laborers,
low income households, small businesses, and other unorganized sector entities.
The objectives of setting up of payments banks will be to further financial inclusion by
providing
(i)

small savings accounts and

(ii)

Payments/remittance services to migrant labor workforce, low income households,


small businesses, other unorganized sector entities and other users.

Small Bank Payment


Scope of Payment Banks:
Acceptance of demand deposits. Payments bank will initially be restricted to holding
a maximum balance of Rs.100,000 per individual customer.
Issuance of ATM/debit cards. However, payment banks cannot issue credit cards.

Payments and remittance services through various channels.

BC of another bank, subject to the Reserve Bank guidelines on BCs.

Distribution of non-risk sharing simple financial products like mutual fund units and
insurance products, etc.

Small Bank Payment


Research Methodology
The process used to collect information and data for the purpose of making business decisions.
The methodology may include publication research, interviews, surveys and other research
techniques, and could include both present and historical information.

The study was carried out in Delhi.


Extensive Library Research was carried out.
Various Websites were referred.
Primary data was collected through interviews.
Various books, magazines and newspapers have been referred.

Small Bank Payment


Chapter scheme
CHAPTER-1: INTRODUCTION
CHAPTER-2: STUDY OF THE INDUSTRY
CHAPTER-3 STUDY OF THE COMPANY
CHAPTER-4: SWOT ANALYSIS
CHAPTER-5: RESEARCH METHODOLOGY
CHAPTER-6: FINDINGS AND ANALYSIS
CHAPTER-7: CONCLUSION
CHAPTER-8: REFERNCE