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.
- 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.
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.