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Payment Bank License

Payment Bank License

The concept of Payment Bank is introduced by the Reserve Bank of India (RBI). The maximum deposit amount to these banks is currently limited to INR 1 lakh for each customer, though there are chances that this amount will be expanded further. Payment Bank operates both the current as well savings account. Those banks who have payment bank license can also offer services like debit cards, internet, mobile banking and furthermore ATM cards.

Our Payment Bank License Includes

Advisory on Payments Bank Business Model

End to End Assistance

Preparation of Payments Bank License Application

Creating a Unique Business Plan

Product and Market research

Auditing of Financial Statements

What is the Capital Requirement to Obtain a Payment Bank License?

  • The minimum paid- up equity capital of the Payments Bank must be Rs.100 crore.
  • The Payments Bank must maintain a minimum capital adequacy ratio of 15 percent of its Risk Weighted Assets (RWA) that is subject to any higher percentage as may be prescribed by RBI from time to time.
  • Tier I Capital must be at least 7.5 percent of the RWAs.
  • Tier II Capital must be limited to a maximum of 100 percent of the total Tier I Capital.
  • However, the Payment Banks are not expected to deal with the sophisticated products, the Capital Adequacy Ratio will be computed under the Basel Committee’s Standardized approaches.

Eligibility Criteria for Payment Banks:

  • Eligibility Criteria for Payment Finance Banks:
  • Required to maintain CRR with the RBI on its outside demand and time liabilities.
  • Invest min 75% of its demand deposit balances in SLR eligible Government securities/treasury bills with maturity upto 1 year.
  • Hold max 25% in current and time/fixed deposits with other scheduled commercial banks
  • Leverage ratio should not be less than 3%
  • Promoter’s minimum initial contribution to the paid-up equity capital at least be 40 per cent for the first five years.
  • Foreign shareholdings should be as directed by FDI policy for private banks which is amended time to time.

Key Benefits of Payment Bank

What are the Activities a Payment Bank Allows?

The activities permitted include:
  • Acceptance of demand deposits to the tune of Rs 1 lakh per customer.
  • Issuance of debit cards.
  • Payment and remittance services.
  • Distribution of financial products such as, mutual funds and insurance.
  • Issuance of a prepaid payment instrument.
  • Internet banking services.
  • Acting as a business correspondent of another bank.
  • Utility bill payment on behalf of the customers

How to reach Finlaw for Payment Bank License