Payment Banks Current Affairs

Airtel launches India’s first Payments Bank service in Rajasthan

Airtel Payments Bank Limited or Airtel Bank became the first payments bank in the country to launch live banking services in Rajasthan.

The pilot phase of the Airtel bank launched in Rajasthan aims at testing systems and processes ahead of a full scale pan Indian launch.

Key Facts

  • Airtel Payments Bank is a subsidiary of Bharti Airtel Limited. Mahindra Bank holds 19.9% stake in it.
  • Airtel retail outlets across Rajasthan will act as banking points. They offer a range of basic, convenient banking services as per Payments Bank guidelines issued by RBI.
  • Customers can open bank accounts by using Aadhaar based e-KYC. Airtel subscriber’s mobile number will function as a bank account number.
  • The bank will accept deposits not exceeding Rs 1 lakh. It cannot perform lending activities, except while giving loans to its employees on approval of the board.
  • It intends to give an interest rate of 7.25% per annum on deposits in savings accounts.
  • It will be offering customers the convenience of cashless purchase of goods/services using their bank accounts/wallets, contributing to of financial inclusion and banking for all.
  • Though payment banks are allowed to issue debit card facility, but Airtel Payments Bank will be not offering this facility right now.

Background

In August 2015, RBI had had given in-principle approval to 11 applicants to set up payments bank by February 2017. So far, out of these 11 applicants, Tech Mahindra Ltd, Cholamandalam Investment and Finance Co, and billionaire Dilip Shanghvi have opted out.

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Payment Banks need RBI’s Prior product approval

The Reserve Bank of India (RBI) has notified entities that have been granted a payments bank (PB) licence will need to take specific approval for products they would be offering to customers.

In this regard, RBI has issued separate operating guidelines for payments banks in view to focus on financial inclusion.

Key Facts

  • Employee of Payment Bank should be available for sufficient duration at a fixed location to attend customers. They must at least have 25% of access points in un-banked rural areas.
  • The main mandate of Payment Banks is to offer remittance services. They will be not allowed to lend.
  • Payment Banks can also offer simple financial products like insurance and mutual funds.
  • The RBI may place suitable restrictions on the design, functioning, or other features of the product of Payment Banks.
  • RBI may even discontinue the product launched by Payment banks if it feels that the product is not suitable for customers.
  • RBI it will have no objection to payments banks making arrangements with other scheduled commercial bank or small finance bank.

Background

RBI had granted in-principle licences to 11 payments banks in August 2015.  While three out of 11 PBs have dropped out, others will have to start operations within 18 months of receiving in-principle approval.

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