What are "Payment Banks" ?

Payment Banks are outcome of Dr. Nachiket Mor committee recommendations to cater to the lower income groups and small businesses.

Payments bank comes under a differentiated bank licence since it cannot offer all the services that a commercial bank offers. Reserve Bank of India (RBI) grants two types of banking licences - universal bank licence and differentiated bank licence.

Credit risk is not involved with the Payments Bank. It can carry out most banking operations but cannot advance loans or issue credit cards.

Payment Banks can accept a restricted deposit, which is currently limited to Rs 100,000 per customer.

Both current account and savings accounts can be operated by such banks. It can accept demand deposits only i.e. savings and current accounts, not time deposits.

Payments banks can issue ATM cards or debit cards and provide online or mobile banking.

Payment Banks can also distribute non-risk sharing simple financial products like mutual fund units and insurance products, etc.

They cannot accept NRI deposits and are only allowed to invest the money received from customers' deposits into government securities.

Payments Banks are registered as a public limited company under the Companies Act, 2013.

It is governed by the provisions of the Banking Regulation Act, 1949; RBI Act, 1934; Foreign Exchange Management Act, 1999, Payment and Settlement Systems Act, 2007, other relevant Statutes and Directives.

Bharti Airtel set up India's first payments bank.


Eligible Promoters are - Resident individuals/professionals, NBFCs, Corporate Business Correspondents (BCs), mobile telephone companies, Supermarket chains, companies, real sector cooperatives.

Public sector entities can also apply to set up payments banks.

The minimum capital requirement is 100 crore.

They need to maintain a Cash Reserve Ratio (CRR).

Required to invest a minimum 75 per cent of its "demand deposit balances" in Statutory Liquidity Ratio (SLR) eligible Government securities/treasury bills with maturity up to one year.