Payment Banks Current Affairs

Government relaxes norms of Atal Pension Yojana to expand coverage

The Union Finance Ministry has relaxed norms of Atal Pension Yojana (APY) to allow small finance banks and payment banks to offer APY distribution. The move is expected to help expand coverage of the scheme and strengthen existing channels of APY distribution.

Key Facts

The APY scheme follows same investment pattern as applicable to National Pension Scheme (NPS) contribution of Central government employees. During financial year 2016-17, the scheme has earned return of 13.91%. There are more than 84 lakh subscribers registered under APY scheme with an asset base of more than Rs. 3,194 crore.

At present 233 Banks and Department of Post are involved with the implementation of the scheme. With relaxation of the norms, now 11 Payment Banks and 10 Small Finance Banks (SFBs) can also offer APY distribution.

Atal Pension Yojana

APY became operational from June 1, 2015 with an aim to provide affordable universal access to essential social security protection to unorganized work force of country, which makes major chunk of labour force (88%). It had replaced earlier Swavalamban scheme.

It is available to all citizens of India in the age group of 18-40 years (thus minimum period of contribution by subscriber is 20 years). Under scheme, subscriber will receive a minimum guaranteed pension of Rs. 1000 to Rs. 5000 per month, depending on his contribution, from age of 60 years.

There is no exit to the scheme before the age of 60. In case of death of subscriber, the spouse of the subscriber shall be entitled for the same amount of pension till his or her death.

Uttar Pradesh with 11.41 APY accounts is highest contributing state of the scheme followed by Bihar  (8.87 lakh subscribers) and Tamil Nadu (6.60 lakh).

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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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