Money & Banking

Payments bank: RBI offers ‘on tap’ licence hope for those who lost out

| | Updated on: Aug 19, 2015
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Kishore Biyani, Videocon d2h, MG George Muthoot, among others, who didn’t qualify

Even as it granted ‘in-principle’ approval to 11 applicants for starting payments bank, the Reserve Bank of India has held out hope of “on tap” licences to the aspirants who did not make it in the first round.

The central bank said it intends to use the learning from this licensing round to appropriately revise the guidelines (for licensing of payments banks) and move to giving licences more regularly, that is, virtually “on tap”.

The Reserve Bank believes that some of the entities that did not qualify in this round could well be successful in future rounds. A total of 41 entities had applied for payments bank licences.

The move to grant payments bank licences to 11 applicants, including Aditya Birla Nuvo, Airtel M Commerce Services, Cholamandalam Distribution Services, Department of Posts, and Reliance Industries, comes in the backdrop of the central bank granting universal bank licence to Bandhan Financial Services and IDFC in the last couple of months.

The RBI may soon announce the names of those who qualified for small finance bank licence, too.

The prominent names that did not make it in this round include Kishore Laxminarayan Biyani, Videocon d2h, Vakrangee, Citrus Payment Solutions, Itz Cash Card, Oxigen Services, and MG George Muthoot. The objectives of setting up of payments banks, according to RBI, will be to further financial inclusion by providing small savings accounts and payments/remittance services to migrant labour workforce, low-income households, small businesses, other unorganised sector entities and other users.

S Ravi, practising chartered accountant and Independent Director, IDBI Bank, said payments banks will complement the traditional banks and help further the cause of financial inclusion. It will also be a wake-up call for existing banks to get their digital banking act together.

Published on January 23, 2018

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