wordpress blog stats
Connect with us

Hi, what are you looking for?

Payments bank guidelines finalized: What’s changed from the draft guidelines

On a first glance the new guidelines for setting up a payment bank by the Reserve Bank of India seem a lot more friendlier. The most significant changes being in the norms for the way funds can be deployed and promoter holding. Our overview of the final Payments Banks guidelines is here. Here’s what changed in the new guidelines, as compared to the draft guidelines released a few months ago.

1. Promoter Shareholding: The RBI earlier had said that companies looking to set up a payments bank should have a minimum paid up capital of Rs 100 crore, of which the promoters’ initial minimum contribution will be at least 40%, to be locked in for a period of five years and gradually brought down to 26% over 12 years from the date of commencement of the bank. In the final guidelines, the promoters no longer have to bring down their shareholding.

2. Deployment of funds:

Payments banks will  not be allowed to lend money. However they will have to invest minimum 75% of its  deposit balances in Statutory Liquidity Ratio(SLR) eligible Government securities/treasury bills with maturity up to one year and hold maximum 25% in current and time/fixed deposits with other scheduled commercial banks for operational purposes and liquidity management. Earlier the RBI had suggested that 100% of the fixed and time deposits of payments banks be invested in government securities.


Advertisement. Scroll to continue reading.

3. Scope of activities

  • Payments banks will initially be restricted to holding a maximum balance of Rs 1,00,000 per individual customer. The RBI increased the scope of this rule and said that they could accept a large pool of money to be remitted to a number of accounts provided at the end of the day the balance does not exceed Rs. 100,000. This allows money to be deposited for large transactions, or for disbursement to multiple entities.
  • Payment banks are also not allowed to to accept NRI deposits but they will allow them to handle cross border remittance transactions in the nature of personal payments / remittances on the current account. Undertaking such transactions in foreign exchange will be enabled by RBI on an application made to it.
  • Payments banks can undertake other non-risk sharing simple financial services activities, not requiring any commitment of their own funds, such as distribution of mutual fund units, insurance products, pension products, etc.


4. Leverage ratio requirements: The payments bank should have a leverage ratio of not less than 3%, i.e., its outside liabilities should not exceed 33.33 times its net worth (paid-up capital and reserves). The earlier guidelines had stated that the leverage ratio of not less than 5%.

Listing on the bourses: The RBI had not mentioned in its draft guidelines the requirements for payments banks to list on the stock exchanges. It now says that payments banks whose net worth exceeds Rs 500 crore, listing will be mandatory and they will be known as systemically important. Payments banks with a net worth less than Rs 500 crore will also be allowed to list on the stock exchanges provided that they conform to the capital markets regulator’s norms.

Read in full

Our Payments Banks coverage
– Draft guidelines for payments banks
– Final guidelines for payments banks

Advertisement. Scroll to continue reading.
Written By

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.



While the market reality of popular crypto-assets like Bitcoin may undergo little change, the same can't be said for stablecoins.


Bringing transactions related to crypto-assets within the tax net could make matters less fuzzy.


Loopholes in FEMA and the decentralised nature of crypto-assets point to a need for effective regulations.


The need of the hour is for lawmakers to understand the systems that are amplifying harmful content.


For drone delivery to become a reality, a permissive regulatory regime is a prerequisite.

You May Also Like


Google has released a Google Travel Trends Report which states that branded budget hotel search queries grew 179% year over year (YOY) in India, in...


135 job openings in over 60 companies are listed at our free Digital and Mobile Job Board: If you’re looking for a job, or...


Rajesh Kumar* doesn’t have many enemies in life. But, Uber, for which he drives a cab everyday, is starting to look like one, he...


By Aroon Deep and Aditya Chunduru You’re reading it here first: Twitter has complied with government requests to censor 52 tweets that mostly criticised...

MediaNama is the premier source of information and analysis on Technology Policy in India. More about MediaNama, and contact information, here.

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ

Subscribe to our daily newsletter
Your email address:*
Please enter all required fields Click to hide
Correct invalid entries Click to hide

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ