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In a boost to payments banks, the Reserve Bank of India has doubled the current deposit limit for them to ₹2 lakh.
“With a view to furthering financial inclusion and to expand the ability of payments banks to cater to the growing needs of their customers, the current limit on maximum end of day balance of ₹1 lakh per individual customer is being increased to ₹2 lakh,” said RBI Governor Shaktikanta Das on Wednesday, adding that it is with immediate effect.
“The extant ‘Guidelines for Licensing of Payments Banks’ issued on November 27, 2014, allow payments banks to hold a maximum balance of ₹1 lakh per individual customer,” noted the Statement on Developmental and Regulatory Policies.
Review of performance
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, it further said, adding that a circular in this regard shall be issued separately.
At a media briefing, Das said this will enable payments banks to operate successfully and serve a wider reach of people.
Rishi Gupta, Managing Director and CEO, Fino Payments Bank, said the enhanced limit aligns with customers’ need and gives them the flexibility to park more money in the savings account.
“Our existing sweep account mechanism helps save funds in excess of ₹2 lakh. The raise in limit also enhances the cause of financial inclusion and, in the long run, will benefit payments bank model with incremental revenue expected from increased deposit base,” he said adding that a limit of ₹5 lakh would have been preferred.
The RBI had, in August 2015, given in-principle licences to 11 entities to run payments banks in a bid to boost financial inclusion. In recent years, many players had requested the RBI to relax the ₹1-lakh cap on deposits.
“While the limits they expected were much higher, I hope this 100 per cent increase will help boost the payment banks access to a greater client network and improve digital transactions across the country,” said Anil Pinapala, Founder and CEO, Vivifi India Finance.
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