The Reserve Bank of India (RBI) has decided to increase the deposit limit for payments banks to Rs 2 lakh per individual customer from Rs 1 lakh at present with immediate effect. Further, the central bank has also increased the limit of pre-paid instruments (PPI) to Rs 2 lakh per individual customer from Rs 1 lakh at present and has directed players to ensure their services are interoperable. As part of its Monetary Policy Committee announcement for April 2021, the RBI said that the deposit limit for payments banks would be increased which means that customers can deposit more funds and companies can expand their product offerings. "Based on a review of performance of payments banks and with a view to encourage their efforts for financial inclusion and to expand their ability to cater to the needs of their customers, including MSMEs, small traders and merchants, it has been decided to enhance the limit of maximum balance at end of the day from ₹1 lakh to ₹2 lakh per individual customer" —RBI Statement on Developmental and Regulatory Policies Since payments banks are restricted from lending and can only provide deposit services, restricted up to ₹1 lakh per customer till now, they rely on investing the funds in government debt securities or certificate of deposits and cross-selling other financial services like payments, insurance and investments for revenue. Despite several years of operations and a multiple partnerships between financial services companies, like insurers, credit card companies and mutual fund houses, PBs were…
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