Paytm Payment Bank gets RBI approval

Paytm Payment Bank gets RBI approval

Posted by P. Charitha on January 5th 2017

Paytm founder and CEO Vijay Shekhar Sharma announced through his blog that the Reserve Bank of India gave permission to formally launch Paytm Payments Bank after a 5 month wait. The company plans to launch its services first in Uttar Pradesh in February 2017 and then expand operations to  Guwahati in the Northeast.
The payments bank would start its operations with Rs 400-crore initial capital and in the first phase the bank would have around 100,000 banking correspondents. It plans to target as many as 200 million wallets, current and savings accounts in the state of UP.
 
What is a Payments Bank  
Payments Bank is a  new concept by the Reserve Bank of India which plans to bring banking closer to all customers by the use of a smart phone rather than the traditional banking system where they have to open accounts going to the banks . These banks can accept a restricted deposit which is currently limited to INR 1 lakh per customer and may be increased further.
 
The guidelines for licensing of payment banks were announced in November 2014 & the RBI gave an in-principle approval to 11 of the 41 applicants. Out of the eleven applicants which  received payments bank licenses from RBI , three recipients withdrew their applications. Airtel Payments Bank Limited was the first payments bank in India to go live in Andhra Pradesh and Telangana and Rajasthan, where over 100,000 customers opened savings accounts in less than two weeks of commencement of services.The others include Aditya Birla Novo , Reliance Industries, Vodafone & Tech Mahindra.

What a Payments Bank Can do 
  • Accept deposits Hold only up to Rs 100,000 per customer
  • Issue ATM, Debit Cards
  • Hand foreign remittances (personal/current a/c) 
  • Distribute mutual funds, insurance, pension products 
  • Set up branches, ATMs, Business Correspondents
  • Become Business correspondent of another bank 
  • Accept more money for transactions, as long as deposit at end of day is Rs 100,000 
What a Payments Bank Cannot do 
  • Lend money to customers 
  • Take NRI deposits
  • Issue Credit Cards 
  • Set up a NBFC subsidiary 

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