On payment banks, RBI Governor Raghuram Rajan has said that the introduction of these banks will make banking “exciting” for customers. According to Rajan Payments Banks will revolutionise banking and the existing lenders will have to improve their services to retain depositors.
“I’ve no doubt banking will become very competitive and universal banks have to provide full service to retain customers,” Rajan said during a chat with SBI Chairman Arundhati Bhattacharya at a conference organised by the bank.
Rajan also allayed public fear and said that these new payment banks will not eat into the low-cost deposit base for the existing banks. He said there is no threat to the banking system and the payment banks will serve only as a feeder for the existing banks.
“There is a lot of scope for everyone, not everybody will succeed but this is a revolution which can happen,” Rajan explained.
On Wednesday, of the 41 applications, only 11 applicants were granted the status of payments banks by the RBI. These are Reliance Industries, Aditya Birla Nuvo, Airtel M Commerce, Dept of Posts, NSDL, Tech Mahindra, Vodafone m-pesa, Cholamandalam Distribution Services, Fino PayTech, Sun Pharma’s Dilip Shanghvi and PayTM’s Vjay Shekhar Sharma.
These applicants have an 18-month window in which they can submit their plans and get the final license.
The payments banks will be allowed to provide payments and remittance services, but they cannot issue credit cards or accept deposits beyond Rs 1 lakh. However, they can issue ATM and debit cards and also distribute mutual fund and insurance products.
More announcements are expected in the current banking revolution. The central bank said that it will announce small finance bank licences next month. RBI is said to have received 72 applications for small finance bank licences. Those who applied for small finance banks include DHFL, IIFL Holdings, Lulu Forex, SKS Microfinance, UAE Exchange and Ujjivan Financial.
Small finance banks can provide basic banking services like accepting deposits and lending to the unbanked sections such as small farmers, micro business enterprises, micro and small industries and unorganised sector entities.
Rajan also spoke about economic growth and the falling rupee. He said that the Indian economy was bound to pick up and that India shouldn’t be concerned if yuan depreciation holds at current level.
(With inputs from PTI)