The Reserve Bank of India will soon come up with India’s first payments bank, which will offer deposit and payment services but not provide loans. 

This idea is in line with the recommendations made by the Nachiket Morcommittee. The central bank sees huge potential for financial inclusion with focus on remittances by involving payment system product.

As per the RBI, while full-service banks require an entry capital of Rs.500 crore, payments banks can start operations with a capital of just Rs.50 crore since all their money will be invested in safe government securities.

They will be required to comply with all RBI guidelines for commercial banks.

According to the recommendations of Nachiket Mor committee:

• Permission should be given to existing banks to create subsidiaries to operate payments banks.
• Payments banks may be created by converting prepaid payment issuers (PPIs). These companies provide cards that customers can use to make payments with the money stored in them. There are 27 PPIs in the country, including Itz Cash Card Ltd, Oxigen Services (India) Pvt. Ltd and Airtel M Commerce Services Ltd.