The Reserve Bank of India released its final guidelines for the setting up of payments banks in the country. The move aimed at improving financial inclusion in the country will allow Pre-paid Payment Instrument (PPI) issuers, Non-Banking Finance Companies (NBFCs), corporate BCs, mobile telephone companies, super-market chains, companies, real sector cooperatives; that are owned and controlled by residents; and public sector entities to apply for a licence as promoters. The move is significant as it allows virtually any company to set up a payments bank in the country. The Nachiket Mor Committee report said that this will end the PPI license and points out the difficulty existing companies face in providing financial inclusion. " Given the difficulties being faced by PPIs and the underlying prudential concerns associated with this model, the existing and new PPI applicants should instead be required to apply for a Payments Bank licence or become Business Correspondents. No additional PPI licences should be granted." the Mor report said. Notes from the guidelines Objectives of payment banks: To further financial inclusion by providing (i) small savings accounts and (ii) payments / remittance services to migrant labour workforce, low income households, small businesses, other unorganized sector entities and other users, by enabling high volume-low value transactions in deposits and payments / remittance services in a secured technology-driven environment. Capital requirements: - The minimum paid-up equity capital of the payments bank shall be Rs. 100 crore. - The payments bank shall be required to maintain a minimum capital adequacy ratio…
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