The Reserve Bank of India (RBI) on Thursday has issued new guidelines for licensing of payments banks. 'The objectives of setting up of payments banks will be to further financial inclusion by providing small savings accounts and payments/remittance services to migrant labour workforce, low income households, small businesses, other unorganized sector entities and other users,' the central bank said.
Existing non-bank Pre-paid Payment Instrument (PPI) issuers, Non-Banking Finance Companies (NBFCs), corporate Business Correspondents (BCs), mobile telephone companies, super-market chains, companies, real sector cooperatives; that are owned and controlled by residents; and public sector entities may apply to set up payments banks, the RBI said.
Payments bank will initially be restricted to holding a maximum balance of Rs 100,000 per individual customer.
Apart from amounts maintained as Cash Reserve Ratio (CRR) with the Reserve Bank on its outside demand and time liabilities, it will be required to invest minimum 75% 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% in current and time/fixed deposits with other scheduled commercial banks for operational purposes and liquidity management.
Further, the minimum paid-up equity capital for payments banks shall be Rs 1 billion and the payments bank should have a leverage ratio of not less than 3%, i.e., its outside liabilities should not exceed 33.33 times its net worth (paid-up capital and reserves).
Also, the promoter's minimum initial contribution to the paid-up equity capital of such payments bank shall at least be 40% for the first five years from the commencement of its business.
The foreign shareholding in the payments bank would be as per the Foreign Direct Investment (FDI) policy for private sector banks as amended from time to time.
RBI further said, the operations of the bank should be fully networked and technology driven from the beginning, conforming to generally accepted standards and norms.
Also, the bank should have a high powered Customer Grievances Cell to handle customer complaints.