Context:
Reserve Bank of India announced Paytm Payments Bank ban
RBI Ban:
- Ban on – Accepting deposits, Offering credit services or Facilitate fund transfers after Feb. 29
- While the payments bank does not lend directly, it offers credit products from third-party entities.
- Ban under – Section 35A of the Banking Regulation Act, 1949
- Section 35A – ‘persistent non-compliance and continued material supervisory concerns in the bank’
Payments banks:
- Comes under – Differentiated Banks
- Objective – To further financial inclusion
- Recommended by – Nachiket Mor Committee
- Registered under – Companies Act, 2013 as a public limited company
- Governed by – Banking Regulation Act, 1949; RBI Act, 1934; Foreign Exchange Management Act, 1999, Payment and Settlement Systems Act, 2007
- Capital requirement – The minimum paid-up capital for payments bank is Rs 100 crore.
- Other requirements – Maintain 75% of deposits in govt bonds and 25% in other banks
- Scope of Activities –
- Acceptance of demand deposits (up to 200,000 Indian rupees per individual customer)
- Issuance of ATM/debit cards.
- They cannot issue credit cards.
- They are not allowed to give loans.
- Cannot accept NRI deposits
- Number of Payment banks – 6
- Airtel Payment Bank
- India Post Payment Bank
- Fino Payment Bank
- Paytm Payment Bank
- NSDL Payment Bank
- Jio Payment Bank.
Nachiket Mor Committee:
- Set up in – 2013 (by RBI)
- Known as -Committee on Comprehensive Financial Services for Small Businesses and Low-Income Households
- Recommendations –
- To provide a universal bank account to all Indians above 18 years of age by January 01, 2016.
- Setting up of differentiated banking system with payments banks for deposits and payments and wholesale banks for credit outreach.
- Aadhaar will be the prime driver towards rapid expansion in the number of bank accounts.
- Adjusted 50 per cent priority sector lending target with adjustments for sectors and regions based on difficulty in lending.
Source: The Indian Express
Previous Year Question
Which one of the following activities of the Reserve Bank of India is considered to be part of ‘sterilization’?
[UPSC Civil Service Exam – 2023 Prelims]
(a) Conducting “Open Market Operations’
(b) Oversight of settlement and payment systems
(c) Debt and cash management for the Central and State Governments
(d) Regulating the functions of Non-banking Financial Institutions
Answer: (a)
