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Lowdown: RBI’s operational guidelines for payments banks

The Reserve Bank of India (RBI) has come out with separate operational guidelines for payments bank after issuing final licensing guidelines in November 2014. Currently, there are 8 players who will commence operations in the coming year. These include: Airtel, Vodafone, Reliance Industries, Idea Cellular, Paytm, FINO Paytech, India Post and National Securities Depository Limited. Payments banks are expected to further financial inclusion, and will provide small savings accounts, and payments and remittance services. Here is a lowdown of the guidelines: 1. Physical access points - The RBI will have to approve payments banks' annual plans for opening physical access points for five years. It may remove prior approval after five years after a review. - For addressing customer grievances and agent support supervision, a payments bank is required to have a bank employee at a fixed location at the district level. 2. Regulation of business correspondents (BCs) - Inter-operability of BCs will be allowed except for opening of savings and current accounts. In cases where a payments bank is acting as a BC for a commercial bank, the BCs from the payments bank cannot open deposit accounts for the partner bank or undertake KYC documentation for that bank. - BCs cannot undertake any offline transactions and need to be connected to the Internet. - Payments banks are exempted from having a base branch for a certain number of BCs or access points managed by BCs as as applicable to scheduled commercial banks. 3. KYC requirements - Payments banks can rely only on electronic authentication or confirmation of terms and conditions for opening an…

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