What is a Payment Bank?
A payment Bank is created by the Reserve Bank of India. Payments bank seeks to o provide financial and payment services to small businesses, low-income households, and migratory workers in a safe, technology-driven environment. They function as regular banks but cannot provide credit or loan facilities.
History of Payments Bank in India
The history of payment banks in India can be traced back to 2013. The RBI set up a committee to look into the feasibility of introducing a new type of bank. This bank would focus on providing basic banking services to people who are currently unbanked. The committee, which was headed by Nachiket Mor, submitted its report in January 2014. The report recommended the introduction of payment banks. The RBI issued the final guidelines for payment banks in November 2014.
The first payment bank in India, Airtel Payments Bank, was set up in January 2017. Since then, a total of 11 payment banks have been set up in India.
Also, check out the Mission Indradhanush for Banks here.
Objectives of Payment Banks
- A payments bank primarily aims to provide secure, technology-driven payment and financial services to small enterprises, low-income consumers, and the migratory labour workforce.
- The RBI’s payments banks programme aims to improve financial service distribution in the country’s outlying areas.
