NSDL Payments Bank Ltd (NPBL), the wholly-owned subsidiary of National Securities Depository Ltd (NSDL), is expecting to start its commercial operations shortly.

NSDL was one of the 11 applicants that received in-principle approval from the Reserve Bank of India in August 2015 to set up payments banks.

The depository received approval from the RBI to commence operations in October 2018.

NSDL Jiffy

Since then, the bank has gone live with its android mobile application – NSDL Jiffy – and has started with savings account opening and maintenance services for individual customers in a Closed User Group (CUG) in a live environment, NSDL said in its latest annual report.

The bank is utilising the CUG phase for testing and improving its various applications and processes before the launch of customer-facing commercial operations.

NPBL is live with services such as money transfer through Real Time Gross Settlement, National Electronic Funds Transfer, Immediate Payments Service, National Financial Switch, and intra-bank transfers have gone live as also the issuance of digital and physical Rupay cards.

Current account opening and maintenance and Unified Payment Interface services will soon to be added in the bank’s product suites.

“The bank conducts live operations in a closed user group and commercial operations are expected to start shortly,” said GV Nageswara Rao, MD and CEO, NSDL.

The bank is testing domestic money remittance service through a business correspondent network, the report said, adding that it is seeking to partner with several financial sector participants to move towards creation of digital asset and investment marketplaces for every Indian.

NPBL said it has obtained live connectivity with Unique Identification Authority of India to carry out electronic know-your-customer (eKYC) as a KYC User Agency (KUA), and the front-end apps are expected to go live shortly, which would allow the bank to open accounts electronically using biometric and OTP-based eKYC.

NSDL’s banking subsidiary will be starting commercial operations in the backdrop of five of the 11 applicants that received the Reserve Bank of India’s in-principle approval to start payment banks either giving up their licences a few months after receiving the approval or a year after commencing operations. Banking experts say the payment bank business model is too restrictive – the deposits they raise cannot be used for lending, but can only be parked in government securities.