The Payments Bank floated by the postal department has received the RBI’s final nod to commence commercial operations.As a differentiated bank, it will confine its activities to acceptance of demand deposits, remittance services and other specified services.A payments bank can accept deposits up to Rs 1 lakh per account from individuals.The Centre has also appointed A.P.Singh, who was earlier Joint Secretary in the Department of Investment and Public Asset Management, as the interim managing director and CEO of IPPB.Singh was also the Deputy Director-General in-charge of financial inclusion and payment systems in the founding team of UIDAI.India Posts Payments Bank has been set up as a company, which is wholly owned by the Indian Government.In 2015, RBI had granted ‘in-principle’ approval to 11 entities, including the Department of Posts, to set up payments banks.Since then three companies/ consortiums had backed out and dropped their plans to start payments banks.Of the remaining eight, Airtel was the first to launch its payments bank with an initial investment of Rs 3,000 crore.
About Payments banks
Payments banks are a new model of banks conceptualised by the Reserve Bank of India (RBI) to meet government’s financial inclusion target. It will be set up as a differentiated bank and will confine its activities to acceptance of demand deposits, remittance services, Internet banking and other specified services but cannot undertake lending services. Payments banks can accept deposits up to Rs. 1 lakh per account from individuals and small businesses. They can issue ATM/debit cards but not credit cards. They can also issue other prepaid payment instruments. They can distribute non-risk sharing simple financial products like mutual funds and insurance products. Non-resident Indians (NRIs) are not be allowed to open accounts in payment banks. This new model of banking allows mobile firms, supermarket chains and others to cater to banking requirements of individuals and small businesses.