RBI grants approval to 11 applicants for Payments Bank

RBI grants approval to 11 applicants for Payments Bank The Reserve Bank of India (RBI) granted in principle approvals to 11 applicants to set up Payments Banks, on August 19, 2015.6 Payments banks aim to provide small savings accounts, and payments and remittance services to low income individuals and small businesses, among other users. The in principle approval granted to the applicants, for setting up these banks, will be valid for a period of 18 months. Once the applicants fulfil the conditions laid down as part of the approval, the RBI will consider granting them a license for commencement of business. Key features of Payments Banks are:  The minimum paid-up capital requirement for these banks would be Rs 100 crore.  There will be a condition to hold a maximum balance of one lakh rupees per individual customer.  The banks would not be able to undertake lending activities, and their revenues will be collected through transaction charges. They will be able to issue debit cards, but not credit cards.  Apart from the Cash Reserve Ratio maintained with the RBI, the banks will be required to invest at least 75% of their deposits in government securities, and at most 25% of the deposits with other scheduled commercial banks.  The banks would be able to act as business correspondents of other universal banks, as per RBI guidelines.  The banks may undertake payments and remittance services through various channels.  The banks will also be able to offer products like mutual funds and insurance.