Mcommerce company, Paytm, has received license from the Reserve Bank of India to set up a payments bank.
Apart from Paytm, the following 10 companies have received approval from RBI:
- Aditya Birla Nuvo Limited (Idea)
- Airtel M Commerce Services Limited
- Cholamandalam Distribution Services Limited
- Department of Posts
- Fino PayTech Limited
- National Securities Depository Limited
- Reliance Industries Limited
- Shri Dilip Shantilal Shanghvi
- Tech Mahindra Limited
- Vodafone m-pesa Limited
Vijay Shekhar Sharma, founder and CEO of Paytm said, “ With this nod from the RBI, we will be able to further drive our overall commitment to financial inclusion for the unbanked segment, modernize payment systems and build more trust for our services.”
In 2013, India’s central bank had outlined a need for niche banking in the country. In 2014 budget, Finance Minister had announced that a structure will be put in place to allow differentiated banks serving niche interests, local area banks, payment banks etc. to meet credit and remittance needs of small businesses, the unorganized sector, low income households, farmers and migrant work force. The Reserve Bank received 41 applications for payments banks, of which 11 have been granted an in-principle nod.
Payments banks differ from conventional banks as they are not allowed to lend to customers or issue credit cards. They can, however, accept deposits of up to INR 1 lakh and can offer current and savings account deposits. They can also issue debit cards and offer internet banking.
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