PAYMENT BANK : A BIG LEAP FOR INDIAN BANKING SCENARIO

It is a new dawn to India and its financial market. It's a dream come true for many small and big  players in this arena whose long wait is at last over. Reserve Bank of India at last accorded license  to eleven strong contenders in the country who applied for license for entering in Banking sector. This license given to them is at bit different. This license is given for the first time to function as 'PAYMENT BANK'. The term needs some details clarification towards it's functioning for the common man who many not be aware of the technical term. The major difference between a normal Bank which is termed as 'Universal Bank' and a payment bank is as under:

a) the payment bank may open account without any minimum balance and in the viral world. It will be totally hassle free something like getting a prepaid SIM card.

b) Payment Bank can receive deposits from account holders up to Rs 100000/- 

c) They cannot sanction any loans

d) They are permitted to issue debit card but debarred to issue credit cards.

c) They can function as 'Business Correspondent' of Universal Bank and cover rural area of the country as well as agent for mutual fund and insurance sector of parent Universal Bank.

d) The deposits received from public must be invested in Government Bonds.

e) They are to maintain Cash Reserve Ratio with RBI.

Now, among these eleven players, who have been given license RIL(Reliance Industries Ltd) has already made an agreement with market leader SBI and Kotak Mahindra Bank and has reached with an agreement with Airtel. With the strong workforce of these two Payment Banks SBI and KotakMahindra will definitely spearhead for Financial Inclusions under the central scheme of ' Pradhan Mantri Janadhan Yojana'. The chairman of SBI Ms Arundhuti Bhattacharjee has rightly commented on her action plan. 

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Our partnership with RIL brings together the strengths of two of India's Fortune 500 cos committed to making an impact on financial inclusion landscape.We see this license is an opportunity to promote financial inclusion by providing banking and transaction service to unbanked, underbanked  and small business.

Unquote 

Among other player biggest is India Post who with its 1.55 lakhs strong branches have the highest presence in rural areas. But they may take more time to come out with full fledged technical back than their rival private players like Vodafone, Airtel , Paytm etc.

Vodafone with its strong thirty thousand plus team members may be waiting to go with any of big Universal Bank like ICICI  Bank or HDFC Bank etc.

So, under this present scenario, probably those small PSU Banks will lose in this rat race because they will initially  not be in a position to coup up with other big players.