HOW PAYMENT BANKS ARE DIFFERENT FROM COMMERCIAL BANKS?


1) While commercial banks in India can lend, payment banks cannot lend.

2) Payment banks to start off cannot collect deposits in excess of Rs 1 lakh. What this means their scope maybe restricted more to semi-urban areas and rural areas. Commercial banks do not have any such restriction.

3) Payment banks are not allowed to issue credit cards. However, they are allowed to issue debit cards. Commercial banks can issue both.

4) Payment banks can align with other commercial banks in the country and act as business correspondents. This will allow both the entities to leverage on opportunities.

5) Payment banks should have a minimum capital of Rs 100 crores. The promoters have to contribute not less than 40 per cent to the capital. That would make the amount Rs 40 crores at the very least. Capital of commercial banks is way higher and their balance sheet size is enormous.

6) The foreign holding in payment banks would follow the same policy as is currently prevalent for FDI in the banking sector at the moment. So, no difference here.

7) All such payment banks must have a customer grievance cell that would entertain all requests and concerns of bank account holders. This is also available with commercial banks.

8) These entities can engage in the distribution of financial products like mutual funds schemes, insurance etc. Commercial banks to can act as intermediaries to serve the needs of financial products of individuals.

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