Payment Bank (Idp2017)

INTRODUCTION
Banks are one of the most important part of any country. In this modern time money and its
necessity is very important. A modern bank provides valuable services to a country. Banking
means accepting the deposits from the customers for lending to the needy and extending the
other services. A bank is an organization which leads money to the borrowers for a purposeful
task, and provides a facility to deposit and withdraw money when needed and charge for it.
Indian banking is the lifeline of nation and its people.
Banks fulfils the role of a financial intermediary. Banking system is a group or network of
institutions that provide financial services for us. These institutions are responsible for
operating a payment system, providing loans, taking deposits, and helping with investments.
Bank helps to develop trade and commerce. A bank is a financial institution licensed to receive
deposits and make loans. Banks may also provide financial services, such as wealth
management, currency exchange and safe deposit boxes.
The word “BANK” derived from the word “BANQUE” which means a Bench or money
exchange table. Finance is the life blood of trade, commerce and industry. Now-a-days,
banking sector. Banking system is an important constituent of the overall economic system. A
bank is a financial institution on and a financial intermediary that accepts deposits and channels
those deposit into leading activities, either directly or through capital market. A bank is a
financial institution and a financial intermediary that accepts deposits and channels those
deposits into lending activities
Prepared By: Ayushi Thakar 1|Page

TYPES OF BANK
RESERVE BANK OF INDIA
The Reserve Bank of India is the central bank of the country. The Reserve Bank of India was
established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India
Act, 1934. The Reserve Bank of India (RBI) is India's central banking institution, which
controls the monetary policy of the Indian rupee. The RBI plays an important part in the

Development Strategy of the Government of India. The Reserve Bank of India uses monetary
policy to create financial stability in India, and it is charged with regulating the country's
currency and credit systems.
The main purpose of the RBI is to conduct consolidated supervision of the financial sector in
India, which is made up of commercial banks, financial institutions and nonbanking finance
firms. Initiatives taken on by the RBI include restructuring bank inspections, introducing off-
site surveillance of banks and financial institutions and strengthening the role of auditors. The
current focus of the RBI is to continue its increased supervision of financial institutions while
dealing with legal issues in banking fraud and consolidated accounting. It also is trying to create
a supervisory rating model for its banks and aims to cut interest rates.
FUNCTION OF RBI
 It acts as a central bank of India.

 It acts as a banker to the Central and State Government.
 It acts as an advisor to the government.
 It acts as banker’s bank and supervisor.
 RBI acts as the controller of money supply and credit.
 It manages the foreign exchanges.
 RBI promotes commercial banking, rural (agricultural) credit, industrial finance and
export finance etc.
 RBI issues currency.
 RBI acts as central clearing house for interbank transactions.
 It act as lender of last resort.
https://en.wikipedia.org/wiki/Reserve_Bank_of_India
https://www.investopedia.com/terms/r/rbi.asp
http://www.isbtonline.com/banking-awareness-details.php?id=36&What-is-RBI-&-its-
Functions-?

INTRODUCTION
Banking sector has become an emerging sector in India. Their services are affecting human life
and their life style. No one can deny that now the banks are becoming a necessity to everyone.
The needs and satisfaction levels of people have moved beyond the previous benchmarks. India
has traditionally been a cash-based economy with limited penetration of formal banking and
financial services.
Now a day’s banking sector plays a very vital and crucial role in human life, especially since
banks motivates people save money for their future. It provides a number of facilities to the
people, where by banking service has become a necessity of the society. In this era of 21st
century every sector has a great challenges i.e. customer satisfaction, productivity, profitability,
etc. Are being a part of the society banks are also facing these challenges, and banks are
handling these challenges very effectively for the betterment of service banks are also
providing innovative services to the customer so that they can get proper benefit from this
sector .
To set new benchmarks in banking sectors RBI launched concept of payment bank. The main
purpose of introduced payment bank is reduced the burden of commercial bank. It is basically
a bank without credit or loan facility and few other restrictions. According to the latest RBI
regulation, an individual can store a maximum of Rs. 1 lakh in a payments bank. However, this
limit may be upgraded depending on the bank’s performance.

HISTORY OF PAYMENT BANK
Reserve Bank of India (RBI), on 23rd September 2013 constituted a Committee on

Comprehensive Financial Services for Small Businesses and Low Income Households
that was headed by Nachiket Mor. The committee submitted its report on 7th January
2014 and also recommended the formation of a new category of bank (Payment Banks)
among its other recommendations.
Draft guidelines for payment banks, seeking the opinion of interested entities as well as
general public was released by RBI on 17th July 2014. Final guidelines for Paymen t
banks were released by RBI on 27th November 2014.
41 applicants applied for the licence of Payment Bank and their list was released by
RBI in February 2015. The licence applications were evaluated by External advisory
Committee (EAC), headed by Nachiket Mor, which submitted its report on 6th July
2015 after examining the financial track record as well as governance issues of the
applicant entities.
As per RBI guidelines, the payment banks will be registered as a public limited company
under the Companies Act, 2013 and licensed under Section 22 of the Banking
Regulation Act, 1949, with specific licensing conditions.
On 19th august 2015, RBI gave in-principle licence to 11 entities to launch Payment
Bank. The In-Principle licence is valid for a period of 18 months and the concerned
entities are required to fulfil the requirements within this period. They cannot engage
in the Banking activities in this period. Upon satisfactory fulfilment of the conditions
required to setup a Payment Bank, RBI will grant full licences under Section 22 of the
Banking Regulation act, 1949.

WHAT IS PAYMENT BANK?
In Indian economy have been cashless transaction and today banks played very important role
in the society. Payment banks have another innovative banking service in India, payment banks
transaction going on only digital instrument. Payment Banks, to which licenses have been
issued by the RBI, are a step in the direction of banking/financial inclusion. They are not only
likely to reach out to unbanked people and rural areas but will also ensure more money coming
into the banking system and will introduce more competition among banks.
Payments banks are specialised banks designed with a lower risk profile. The purpose behind
these banks is to provide quick and basic banking services to the people at the bottom.
Payments bank is played important role in India as a mechanism for financial inclusion and a
millstone in Indian banking. The main purposes of payments bank not conduct business but
also serve people. The new model of banking allows mobile firms, super market chains and
others to cater to banking requirements of individuals and small business.
Payments Bank is a new banking model developed by the Reserve Bank of India (RBI). It is
basically a bank without credit or loan facility and few other restrictions. According to the latest
RBI regulation, an individual can store a maximum of Rs.1 lakh in a payments bank. However, this
limit may be upgraded depending on the bank’s performance.
A payments bank is like any other bank, but operating on a smaller scale without involving any
credit risk. In simple words, it can carry out most banking operations but can't advance loans
or issue credit cards. It can accept demand deposits (up to Rs 1 lakh), offer remittance services,

mobile payments/transfers/purchases and other banking services like ATM/debit cards, net
banking and third party fund transfers.
Payments banks will be entering a very competitive and increasingly commoditised market for
savings and payments products, joining new banks, government schemes, and specialised
payments providers all vying for clients and transaction volumes. Therefore, the success of the
payments bank model hinges on its ability to be relevant to consumers and commercially
sustainable.
Payments Banks will magnify the potential of financial inclusion in the economy. It will
empower those citizens who have only transacted in cash, to head towards formal banking.
Traditional banks may be hesitant to open branches in every village due to its uneconomic
returns, but simple mobile phone coverage is all that is required now.
http://abhinavjournal.com/journal/index.php/ISSN-2277-1166/article/view/1312
FUNCTIONS AND GUIDELINES ISSUED BY RBI

 Minimum capital required should be Rs.100crore.
 25% of the branches should be established in rural areas where banking facility is not
feasible.
 They are ought to use ‘Payment bank’ so as to differentiate it from other banks.
 They are been registered under the Companies act, 2013.
 For the first five years, the promoter contribution should be 40%.
 RBI has given approval for these payment banks for about 18 months and they need to
follow the above guidelines in a stipulated timeframe, as mentioned by RBI.
http://www.bankexamstoday.com/2016/11/growth-of-payment-banks-in-india.html
WHAT IS THE OBJECTIVE OF CREATING PAYMENT BANKS IN

INDI?
We can sum up the objectives in one sentence that these banks have been created to help India
reach its financial inclusion targets. This type of bank can be highly useful for migrant
labourers, low income households, small businesses, and other unorganized sector entities. RBI
in its guidelines says “the objectives of setting up of payments banks will be to further financial

inclusion by providing (i) small savings accounts and (ii) payments/remittance services to
migrant labour workforce, low income households, small businesses, other unorganised sector
entities and other users.
NEEDS OF PAYMENT BANK

A payments bank is like any other bank, but operating on a smaller scale without involving any
credit risk. In simple words, it can carry out most banking operations but can't advance loans
or issue credit cards. It can accept demand deposits (up to Rs 1 lakh), offer remittance services,
mobile payments/transfers/purchases and other banking services like ATM/debit cards, net
banking and third party fund transfers.
OBJECTIVES OF PAYMENT BANK

 Payment bank is a big approach towards financial inclusion by offering small savings
account and payment settlement services to small businesses, unorganised sector,
labour workforce and other users.
 The main objective of the payment banks is to provide a secure technology-

driven environment to develop financial services and provide simple payment
methods for small-scale businesses and low-income households. It is largely intended
for the remote areas of the country.
 People should adopt the option for payment bank to reduce the working burden of
Commercial banks. Every person is doing financial transactions many times in a day in
which ‘Payment’ is a main objective.
 The target groups for Payments Banks are mainly India’s migrant laborers, low-income
households and small businesses to whom savings accounts and remittance services can
be offered at lower transaction costs. It is envisaged that Payments Banks will
accelerate the penetration of financial services among the low income customer
segments by leveraging technology and building a large geographical footprint.
WHO ALL ARE ELIGIBLE TO SET UP A PAYMENTS BANK?

RBI permits non-bank Prepaid Payment Instrument (PPI) issuers, individuals and
professionals, non-banking finance companies (NBFCs), corporate business correspondents

(BCs), mobile telephone companies, super market chains, companies, real sector cooperatives
that are owned and controlled by residents and public sector entities to apply for a payments
bank licence. Setting up of a joint venture by a promoter with an existing commercial bank is
also allowed.
IMPACT OF EXISTING BANK

 Payments banks will play a key role in rural areas. By doing so they will bring the
unbanked people under the ambit of banking.
 It will lead to more financial inclusion and they will also make the poor more financially
literate.
 The existing top banks will not have any impact by the payment banks as payment
banks are limited to only specific areas.
 Payment banks even act as a business correspondent, so now the major banks can tie
with the payment banks so as to improve their reach in every part of the country.
 In fact, many of the banks have started tying up with the payment banks.
HOW PAYMENT BANKS ARE DIFFERENT FROM TRADITIONAL

BANKS?
Item Payment Banks Traditional Banks
Confined or restricted
(cannot provide lending
Range of services services) Full services
Comprehensive coverage
of remote areas such as
villages or rural areas More confined to urban
Reach and semi-urban areas
Technology driven, low Through bank branches,

cost platforms (such as call-centres, online and
Channels mobile) mobile banking channels
Unbanked/under banked Mostly reside in metros,

Target Customer segment with limited urban, or semi-urban
Segment access to financial services areas

such as migrant labour
workforce, low income
households, small
businesses, other
unorganised sector
Yes (maximum of Rs. 1.0

Can accept deposits lakh) Yes (no upper limit)
Can issue debit / ATM

cards Yes Yes
Can engage in lending

(or loan) activities No Yes
Can issue credit cards No Yes
Can distribute third

party financial products
like Mutual Fund and
Insurance Yes Yes
Regulated by RBI Guidelines RBI Guidelines
https://www.paisabazaar.com/financial-planning/articles/7148-what-are-payment-banks-and-
are-they-really-an-alternative-to-traditional-banks/
WHAT THE PAYMENT BANKS CAN DO?
 They can raise deposits of up to Rs. 1 lakh, and pay interest on these balances just like a
savings bank account does.
 They can enable transfers and remittances through a mobile phone.
 They can offer services such as automatic payments of bills, and purchases in cashless,
cheque less transactions through a phone.
 They can issue debit cards and ATM cards usable on ATM networks of all banks.
 They can transfer money directly to bank accounts at nearly no cost being a part of the
gateway that connects banks.
 They can provide forex cards to travellers, usable again as a debit or ATM card all over
India.
 They can offer forex services at charges lower than banks.
Prepared By: Ayushi Thakar 10 | P a g e

 They can also offer card acceptance mechanisms to third parties such as the ‘Apple Pay.’
WHAT THE PAYMENTS BANKS CANNOT DO?
 No NRI deposits should be accepted

 Cannot issue credit card
 Not allowed to set up subsidiaries to undertake non-banking financial services activities
 Other financial and non-financial services activities of the promoters should not be
mingled with the working of payment banks
IMPACT OF TECHNOLOGY
Payment banks are relied on the technology. It is providing such a platform that the phone is
being used as a digital wallet. There are multiple wallets going around which are of no use as
their validity period varies between six months to a year. The money which is stored in the
wallet is ideal and it does not fetch any interest. As wallets accept very low values they do not
require any KYC norms, so there is every possibility of fraud. To meet these challenges
technology driven companies need to come up with more innovative ideas and they need to
join with the payment banks to gain more advantage in the market. In fact, these payment banks
and wallets can contribute together towards a financial inclusion.
WHAT ARE THE SERVICES OFFERED BY PAYMENT BANKS IN

INDIA?
 A payment bank can accept deposits up to a maximum of Rs.1 lakh only per individual
customer. Demand Deposits and saving bank deposits can be accepted from individuals,
small firms and other entities.
 People can open a Savings bank account or a current account with these payment banks.
 Payment bank can pay interest on the deposits just like normal banks.
 Payment banks are allowed to transfer payments through any channels like Branches,
Automated Teller Machines (ATMs), business correspondents etc.

 Payment banks can issue debit cards/ATM cards to its customers.
 Mobile banking can be accessed through these payment banks.
 Internet banking services can be provided by a payment bank that includes payment
mechanism as approved by RBI such as RTGS/NEFT/IMPS.
 A payment bank app can be used to make utility bill payments as well.
 A payment bank can involve in providing basic financial services like access to mutual
funds, insurance products, pension products, forex services subject to the conditions set
by RBI.
https://fintrakk.com/payment-banks-in-india-meaning-interest-rate-services-list-of-payment-
banks/
HOW IS A PAYMENTS BANK DIFFERENT FROM A COMMERCIAL

BANK?
There are two kinds of banking licences that are granted by the Reserve Bank of India -
universal bank licence and differentiated bank licence. Payments bank comes under a
differentiated bank licence since it cannot offer all the services that a commercial bank offers.
In particular, a payments bank cannot lend. It can take deposits up to 1 lakh per account and it
can issue debit cards but not credit cards. Commercial banks in India like State Bank of India
or ICICI Bank, do not have any such restrictions.
The impact on private sector banks will be minimal because they have already made strong
investments in technology. Also some of the private sector banks like Kotak Mahindra Bank
Ltd, Yes Bank Ltd and ICICI Bank Ltd have tied up with some of the companies that have got
approval for setting up payment banks and hence will not be affected much.

IMPLICATIONS ON FINANCIAL LANDSCAPE
The government of India and the people of India will benefit from the implementation of
Payments Banks. Following will be the major financial implications in different areas:
1) Inclusion of remote rural areas:

Most importantly, payments banks will essential ensure that every person with a mobile data
service connection will be able to avail banking services using the online electronic medium.
Thus, digital technology will be the vehicle for banking.
2) Reduction of Black Money:

Minimizing the cash transactions will be a very important tool for potential elimination of black
money from the financial system. Using payment banks as an instrument to assist schemes like
Jan Dhan Yojana, black money problem can be very much tackled.
3) Secure medium minimizing the need for ATMs:

Payment Banks will provide a secure and cashless mode of transaction. With increased use of
such institutions, the need for Debit / Credit Cards along with the need for ATMs will reduce.
This will help in space conservation, especially in cities.
4) Efficient implementation of subsidy schemes:

The arrival of payment banks, specially the ‘Indian Post’ will help in delivery of subsidy and
other welfare schemes to the needy. There are over 1.5 lakh post offices to serve as physical
medium for transferring subsidies. Ariel along with Vodafone will further assist in banking
facilities using the mobile services. Thus, subsidies in kerosene or LPG, etc. will help in
ensuring the benefits of the scheme will be availed by the poor.
5) Benefit to government:
Such institutions will benefit the government in acquiring low cost loans because the only
borrower from the payment banks will be the government itself (lending to account holders is
not allowed).

6) Digital India Campaign:
This movement will get an additional impetus because of the proliferation of payments banks
will drive the need for a digital infrastructure. Having Vodafone and Airtel as the current
payments banks will only help in this campaign.
7) Impact on traditional Banks:

Increasing the number of financial institutions will reduce the banking costs resulting due to
competition between banks and increase in payments banks. Costs for ATM transactions,
cheque books, draft fees, etc. will come down.
Apart from the above effect, traditional banks need not fear the payments banks since these
will be specialized banks catering to only a particular niche area.
There can, instead, be a collaboration between the traditional and payments banks so that the
reach of banks like ICICI, HDFC, etc. can be increased. Some of these collaborations have
already started. For egs: Kotak Mahindra Bank Ltd. will own 19.9% stake in Airtel.
Thus, in the words of our ex-governor Dr. Raghuram Rajan, the traditional banks and payments
bank will ‘complement’ each other, rather than ‘competing’.
ADVANTAGES OF PAYMENT BANK
CURRENCY CIRCULATION
Presently, currency circulation is less in urban areas due to the use of Debit/Credit Cards and
Internet/Mobile Banking compared to rural and semi urban areas. With Payment Banks using
Technology-mobile phones and bio-metric system (Aadhar Card enabled bank accounts)-the
use of currency circulation in these areas too will decrease drastically. Payment of utility bills,
tax payments, and small business transactions will change to Wire Transactions. This will help
fight the problem of forged notes and reduce the import of paper for printing currency.
A NARROW BANKING MODEL
Attracting deposits for lending is one of the core activities of the Commercial Banking system.
However, mobilising deposits and investing them in safe mode-in treasury bills, government
securities-is called Narrow Banking. Since Payment Banks are mandated to invest their
mobilised funds in government securities, these maybe classified under the ‘Narrow Banking

Model’. This is the safest model as there is no Credit Risk involved, and the Spreads are high
due to the mobilisation of low-cost deposits.
100% SAFETY
The Maximum Deposit to be mobilised by Payment Banks has been capped at Rs.1,00,000/-.
The maximum deposits guarantee covered by DICGC is also Rs.1,00,000/-this means
depositors’ funds with payment banks are Completely Secure. This is one of the USPs that will
attract Savings Bank Accounts to Payment Banks-most customers in the Rural Areas seek
complete security for their hard earned savings funds. The activation of these Banks across the
country will also lead to the decline of Chit Funds, and other unauthorized institutions that
exploit Rural Population.
HIGH SPREAD
The Operational Cost for these banks is less compared to Conventional Banking system.
Further the use of latest Technology will increase the Spread of their business operations. In
addition to Spreads, as these banks are authorised to sell other financial products such as Life
Insurance, General Insurance and Mutual Funds like SIPs, etc. Presently Life and General
Insurance penetration levels are low in India when compared to other countries. Payment Banks
will increase the penetration level of these products. Moreover the fee-based income through
Cross Selling will add to their Bottom-Line.
ONE SEGMENT ONE PRODUCT
Payment banks are authorised to mobilise Savings Bank accounts up to Rs.1, 00,000/- from
salaried employees, petty vendors, agriculturists, landless labourers and small scales. This one
product approach will be hugely beneficial as marketing skills required to sell this product is
minimal. Further, this niche segment is not fully tapped by Commercial Banks. The differential
service provided by the Payment Banks to the customer will result in high profitability.
REACH
In India, Mobile Usage is increasing and people-including rural population is well informed
about its usage and functionalities. Mobile Service Providers have been allotted licenses to start
Payment Banks. These providers using latest technology will reach the customers in the Nnook
and corner of the country easily incurring least cost of operations.

LOW COST OF OPERATIONS
Brick and Mortar Banking is a Capital-intensive Business Model and Commercial Banks would
find it difficult to open branches in the unbanked and far-flung areas as incremental cost would
exceed incremental benefit. With the help of Business Correspondents or Franchise Banking
System, Payment Banks will provide Low Cost services to the Customers located in the Remote
Areas.
http://yojana.gov.in/public-account2jan.asp
MAJOR PLAYERS OF PAYMENT BANK

AIRTEL PAYMENT BANK
 Airtel Payments Bank Limited is a public limited company. Airtel Payments Bank is
the first entity to get the final licence from Reserve Bank of India for launching a
Payments Bank.
 "Our aim with Airtel Payments Bank is to give every Indian access to an equal,
effective and trustworthy banking experience."
Airtel payment bank type Public company
industry Financial services
Founded 2016
Area served India
Products Banking
Parent Bharti Airtel LTD
CEO Shashi Arora

https://www.airtel.in/bank/about
https://en.wikipedia.org/wiki/Airtel_Payments_Bank_Limited
INDIAN POST PAYMENT BANK
 Indian post payment bank is second payment bank in India.

 India Post Payments Bank (IPPB) as a Public Limited Company
 India Post started its payment bank services as pilot project at Ranchi and Raipur while
the rest of the districts
 India Post Payments Bank (IPPB) has appointed Suresh Sethi as its Managing Director
and Chief Executive Officer (CEO)
http://www.hindustantimes.com/ranchi/nation-s-first-india-post-payments-bank-opens-in-
ranchi-raipur/story-YegzgDgJtfV8Tf0ndM18NM.html
PAYTM PAYMENT BANK
 Paytm is an Indian electronic payment and e-commerce brand based out of Delhi NCR,
India The name is an acronym for "Payment through Mobile.
 The Paytm Payments Bank will bring a new banking model to the world where an account
holder’s money will be absolutely safe.

 Paytm payment bank launched in 23 may 2017
 Renu Satti, vice-president of business at Paytm, will take over as the chief executive
officer (CEO) of Paytm Payments Bank
 Popular digital payments player Paytm, which shot to fame after the demonetisation
experiment, is now branching out into the fast-growing payments bank segment.
https://www.dailyo.in/politics/asean-modi-trump-manila-indo-pacific-quad-
alliance/story/1/20555.html
http://www.livemint.com/Companies/oqjQhSMwWNlO9hCgKqrCoL/Paytm-to-start-payments-
bank-operations-from-23-May.html
https://en.wikipedia.org/wiki/Paytm

FINO PAYMENT BANK
 Fino payment bank has tied up with Gokul Dairy and Mother Dairy to digitise payments in
the milk industry the bank will open accounts for milk pourers who collect milk and deliver
it at the milk collection centres across villages.
 Rishi Gupta CEO of FINO payment bank
https://economictimes.indiatimes.com/industry/banking/finance/banking/fino-payments-
bank-ties-up-with-mother-dairy-and-gokul-dairy/articleshow/61561306.cms

SWOT ANALYSIS
STRENGTH
 Payments Banks should focus more on building a highly convenient access channels
for consumers,
 Payments bank will essentially depend on Technology to reach to all the customers, using
mobiles as the vehicle of banking, as mobile go even where humans don't. While physical bank
branches will still be needed for some purposes likes opening an account, depositing cash etc.,
Mobile phone will become the virtual ATM and small payments cheque-book, day-to-day
payments including peer-to-peer payments.
 The cost savings through paperless branch-less mode of banking
 Technology is the backbone and plays a central role across all functions and processes
 Cost efficient technology platform to reduce overall cost transaction
WEAKNESS
 They cannot indulge in lending activities
 Credit Cards cannot be issued
 NRI deposits cannot be accepted
 Lack of awareness about payment bank
OPPORTUNITIES
 Financial inclusion and unbanked/under-banked population are the priority target

market
 The cost savings through paperless branch-less mode of banking
 To develop rural area
 Payments bank will essentially depend on Technology to reach to all the customers,
using mobiles as the vehicle of banking.
 Government will be the biggest beneficiary of the payment banking, as payment banks will
expand its access to cheap funds.

THREATS
 Competition
 High expectation of customers
 Getting trust
 Difficulty for convincing customers

CONCEPTUAL FRAMEWORK
Technology has proved to be an effective tool to expand financial Inclusion. Technology has
allowed banks to increase their scale rapidly & manage increased business & transactions
volume with lesser man power & reduced costs Technology not only enhances the competitive
efficiency of the banking sector by strengthening back-end administrative processes, it also
improves the front-end operations and helps in bringing down the transaction costs for the
customers. Besides this, technology plays an important role in reducing cost of providing
banking services, particularly in the rural and unbanked areas. RBI has been actively involved
in harnessing technology for the development of the Indian banking sector over the years.
In a country where there are more mobile phone owners than bank account holders, digital
financial services are expected to receive significant traction. Banks are increasingly using
digital platforms for serving both the unbanked and the under banked population, especially in
rural/remote regions, as the costs are significantly lower as compared to traditional banking
channels. Digital financial services offering helps banks operate on low cost models and
thereby positively impacts their overall profitability of banks. Furthermore, with an increase in
financial inclusion and digitalization of banking, requirement of cash in the economy will
reduce, thereby helping in controlling unaccounted money in the economy. The main

advantage of the mobile phone technology lies in its capabilities to reach everywhere and be
reached from everywhere. Mobile banking is a powerful way to deliver banking services to a
large population base who own a mobile phone.
With almost 2/3rd of the Indian population living in villages, we see that approximately 50%
of the Indian population is unbanked and thus lacks banking accounts and its facilities.
Payments banks will provide secure cashless transactions using the digital medium. It will use
mobile data services to enable monetary transfers and thereby ensure each transaction is
recorded (to reduce black money).
Another important benefit is cash digitisation. Nearly 90% of transactions in India are typically
cash based, but demonetisation has given a huge push to payments banks with its emphasis on
digital transactions. We have already witnessing new set of customers, including vendors,
grocers and small business owners, opting for cashless payments. The adoption level has only
increase going forward, and payments banks have facilitated this digital transformation.
Through these payment banks, RBI aims to bring the vast unbanked population under digital
economy. Use of digital platforms can help consumers spend their money safely and securely,
save and build credit profiles for lending opportunities unavailable in the informal banking
sector, and participate in a growing online economy.
RBI has always emphasized upon the deepening and widening the reach of Financial Services
so as to cover a large segment of the rural & poor sections of population. But rural area cannot
get the fruits of all these. To overcome these limitations RBI introduced payment bank. The

main objective of a payments bank is to provide small savings accounts, payment services,
ensure delivery (implementation) of subsidies across all sections of households and workers.
Payment banks will provide basic services to people who do not have a bank account that
includes millions of workers in our country. The setting up of Payments Banks will further help
in financial inclusion by providing small savings accounts, payments and remittance services
to migrant labour workforce, low income households, small businesses, other unorganized
sector entities and other users.

1 Dr. G. Sabitha Srinivas (2017) “Financial Inclusion-Role of Payment Banks in India”
Opening of new branch in every village is uneconomical for any traditional bank. Transactions
through mobile phones may cover a low cost platform for basic banking services to every rural
or urban citizen. India’s domestic remittance market is more than Rs. 900 Billions. The
payment banks play a vital role in implementing the government’s direct benefit transfer
scheme, where subsidies on healthcare, education and gas are paid directly to beneficiaries’
accounts. Keeping in mind the government's unwavered digital drive target, customers shifting
from cash transactions to operating their accounts on their mobile phone, this paper discusses
the objectives of primary banks, its history and services rendered by it. This paper also focuses
on m-Banking, the Department of Posts, Pradhan Mantri Jan-Dhan Yojana and the India Post
Payments Banks.
Conclusion
Millions of Indians don’t have access to banking facilities. They cannot avail of government
benefits, loans and insurance, and even interest on savings. M- Banking, PMJDY and IPPB
will reach the un-banked and the under-banked across all cross sections of society and
geographies.
2 Nidhi chandran (November, 2015)” PAYMENT BANK – A NEED OF DIGITAL

INDIA “
The concept of Payment bank was first floated by RBI Committee led by Board member
Nachiket Mor. The committee on comprehensive financial services for small businesses and
low income formed in 2013 came out with its report in early-2014. Main objective of Payment
bank is to reduce the working burden of Commercial banks. For this, RBI has given approval
to 11 companies out of 41 applicants. It primarily provides remittance, payment services,
transfer money directly to bank account etc. It cannot involve in any credit risk.
Conclusion
Payment Banks promises to be a game-changer because of by using the mobile platform to
provide basic banking transactions through mobile phones. The decision to license some of the
country’s biggest corporate and mobile telecom firms to start payment banks promises to be a
similar game-changer in India.

3 Dr. (Mrs.) K. Meena Kumari (2017) “India Post Payments Bank – Problems and
Prospect”
Payments Bank is a new kind of bank which is promoted with the express purpose of extending
the reach of banking to vast majority of the unbanked and under banked segments of the
population. Payments bank promoted by India Post is expected to use the physical network of
post offices as well as digital platforms such as mobile, internet banking, debit cards, point of
sale devices, etc. to provide the designated financial services at low cost to target population.
Payments Bank might be able to provide last mile connectivity especially in those areas which
do not have any bank branches but has a post office. Its’ huge presence in rural areas and the
trust that it enjoys among vast segments of population might enable it to succeed where
commercial banks have failed. The present study examines the role and objectives of payments
banks with special reference to India Post Payments Bank, relevance in achieving financial
inclusion objective, prospective challenges and problems, suggestions for overcoming those.
Conclusion
Payments Bank established by the Department of Posts has the potential to be the most
accessible banking network in the country. With the postal delivery system combined with
digital platform such as mobile, internet banking, prepaid instruments, debit cards, ATMs,
point of sale devices, Payments bank is set to be the face of transformation of post offices and
be major drivers in financial inclusion initiative of the Government of India. However, to
realize its potential, it is necessary to undertake modernization of post offices so as to provide
uniform service. As post man is to be interface between the bank and the customer, he should
be adequately trained to provide banking services. Products should be tailored to the
requirements of customers and high level of awareness should be created about them. Once it
succeeds in being an effective channel for providing savings, payments and remittance
facilities, its activities can be extended to encompass extension of credit as well.
4 DR Ravi (May, 2017) “Payment Banks: Emerging Challenges & Opportunities of

Cashless Transactions in Indian Economy”
In Indian economy have been cashless transaction and today banks played very important role
in the society. Payment banks have another innovative banking service in India, payment banks

transaction going on only digital instrument. Payment Banks, to which licenses have been
issued by the RBI, are a step in the direction of banking/financial inclusion. They are not only
likely to reach out to unbanked people and rural areas but will also ensure more money coming
into the banking system and will introduce more competition among banks. The innovation is
also expected to accelerate India’s journey into a cashless economy. India’s domestic
remittance market is estimated to be about Rs. 800-900 billion and growing. With money
transfers made possible through mobile phones, a big chunk of it, especially that of the migrant
labour, could shift to this new platform. Payment banks can also play a crucial role in
implementing the government’s direct benefit transfer scheme, where subsidies on healthcare,
education and gas are paid directly to beneficiaries’ accounts.
Conclusion
Payment banks can be conceptualized and understood an entity similar to traditional banks but
catering to a niche area. The main aim of a payments bank is to provide small savings accounts;
payment services ensure delivery of subsides across all sections of households and rural people.
Today many people not have a bank account that in includes millions of people in our country.
We see that approximately 50 percent of the Indian population is unbanked and thus lacks
banking accounts and its faculties. Payments bank has provided secure cashless transactions
using the digital medium.
5 Varun Kesavan August (2015) “The Diversification of Banks to the Era of Payment
Banks By Reserve Bank of India with Specific Reference to Indian Banking Sector”
Now a day’s banking sector plays a very vital and crucial role in human life, especially since
banks motivates people save money for their future. It provides a number of facilities to the
people, where by banking service has become a necessity of the society. In this era of 21st
century every sector has a great challenges i.e. customer satisfaction, productivity, profitability,
etc. Are being a part of the society banks are also facing these challenges, and banks are
handling these challenges very effectively for the betterment of service banks are also
providing innovative services to the customer so that they can get proper benefit from this
sector . Banks have influenced the economics and politics for centuries. The objective of this
paper is to analyse the services provided by banks, and to observe how innovative, and new
services are being given to the society. It also tries to understand these facilities or services are
beneficial to the society and as well as the banks. This paper is descriptive in nature, and data
has been collected from various secondary sources.
Conclusion

The innovation can give the better success to the banking sector. But provided it must showcase
an exemplary performance in gaining customer satisfaction and fulfilling the requirements of
customers by all means, and it is the only way of gaining success for a bank.
6 Madhavi Damle, Pushpendra Thenuan, Jimit Raval (2016) “Genesis of Payment Banks:
It’s Stimulus on the financial inclusion in India”
India is facing challenges of achieving financial inclusion with 1.25 Billion of population
where 64% of population is still unbaked or do not use any formal financial services where
large number of people belong from rural India. To study aspect of financial inclusion in India
Nachiket Mor Committee is established in 2013. The Committee has proposed to set up of
Payments Banks whose primary objective is to provide small savings accounts, payments and
remittance services to a migrant labour workforce, low income households, small businesses,
and based on recommendation RBI grants “in-principle” approval to 11 Applicants for
Payments Banks to provide financial inclusion based on banking penetration, deposited
penetration, infrastructure, popularity, technology and past experience which includes
organization from different domain like telecom service provider(TSPs), mobile wallet,
banking services, consumer goods, postal offices, business correspondence. Our paper reviews
the parameter for financial inclusion and business model of existing system and payment bank
and issues faced by traditional banking system includes Business correspondent (BC), ATM,
mobile banking, Basic Saving Bank Deposit and pre-paid instrument (PPI) which can be
overcome using payment bank. It also includes analysis and study of 11 Applicants for
Payments Banks received in-principle and capability to penetrate rural India to provide
financial inclusion. Payment banks are a good way of reaching the masses for the even the
smallest of payment at the odd hours, which defiantly makes the payment systems viable for
the masses. Also as Indian system is that the masses majorly deal in cash and this system
becomes the pseudo cash handling system and so it is this that digitally captures even the
smallest transactions.
Conclusion
The payments-bank model is potentially an important innovation, which will help increase the
scale and efficiency of the financial inclusion process. There are several concerns raised about
the viability of the Payments Bank as large profitable banks are offering payment services in a
big way.

7 K.Lohithkumar, D.Mahammad Rafi, J.Mahaboob Rabbani (NOV 2016) “Payment
Banks In India: New Land Mark In Banking Sector”
The term “Payment Banks” is new and seems to have been invented in Indian context. In
September 2013, a “Committee on Comprehensive Financial Services for Small Businesses
and Low Income Households”, headed by Nachiket Mor, was formed by the RBI. By January
2014, the Nachiket Mor committee submitted its final report and one of its recommendations
was the formation of a new category of bank called payments banks. The Main objectives of
setting up of payments banks will be to further financial inclusion by providing (i) small
savings accounts and (ii) payments/remittance services to migrant labour workforce, low
income households, small businesses, other unorganized sector entities and other users.
These banks can accept a restricted deposit which is currently limited to 1 lakh per customer
account. These banks cannot issue loans and credit cards. Both current account and savings
accounts can be operated by such banks. Payments banks can issue services like ATM cards,
debit cards online banking and mobile banking. Payments banks are expected to revolutionise
financial services the way e-commerce has transformed the retail industry, through service and
price differentiation, refreshing approach, choice to the customer, focus on volumes over
margins, and more importantly, deconstruction of established paradigms
Conclusion
Payment Bank play crucial role in banking sector because of its have there is no restriction on
the income levels of those who wish to open accounts in payment banks, those who have salary
accounts in regular bank accounts can also open an account in a payment bank Individuals can
use the payment bank account to make daily or monthly cash transactions, either through debit
card or through mobile.
8 Gaurav Taneja, Narinder Kumar Bhasin (2016) “Role of Payment Banks and Small
Banks in Achieving Financial Inclusion”
Financial Inclusion or inclusive financing is the delivery of financial services at affordable

costs to sections of lower income segments of society in comparison to financial exclusion
where those services are not affordable or available. Around 2 billion of world’s population
have no access to various types of financial services which are provided by different financial

institutions like Banks, Mutual Funds, Life Insurance companies, General Insurance
Companies, NBFCs (Non-Banking Financial Services), Micro-Finance Institutions etc. It is
being generally discussed that as Banking services are good for common Man, the availability
of Banking and payment services to the entire population without any discrimination is one of
the important objective of Financial Inclusion.
Conclusion
In next few years, there might be increased demand for Mergers and Acquisitions of Small and
Mid-Sized Banks. Banking Sector may witness huge volatility and acute competition with
destabilizing turmoil and struggle to survive. The idea of Payment Banks and Small Banks are
unique contributions of our Central Banker which will promote Economic Development and
Rural Banking in our backward economy. We can say, a revolution will take place in Indian
Banking industry which will further increase Financial Inclusion in our country. Both Small
and Payment Banks are the future of the Banking Sector and can easily achieve Financial
Inclusion.
9 Dr. J.C. Pande (2015) “Payment Banks” – A Newer Form of Banks to Foster
Financial Inclusion in India
Innovation and enterprise form the essence of opportunities and find reflection in every facet
of our functions. With ethos of innovation the bankers have constantly endeavoured to develop
new products which are suitable for their clients/ prospective clients’ base and conditions. The
evolving economic landscape and aspirations of the people have driven the Govt to plan
seamlessly for inclusive banking for realising the opportunities that lie within. Considering the
long outstanding need for reaching out to the far flung non-banked areas of the country, the
Reserve Bank of India has done well to introduce more competition among banks by
authorising, in principle, a new kind of bank. On 19th Aug 2015, the RBI announced eleven
approvals for Payment Banks, a stripped down version of a full service bank which is designed
to reach people outside the span of formal banking services. In the present highly competitive
banking; which demands evolving strategies to promote interest of all stakeholders, the need
to cut costs in its product & services; opening of more new full-service bank’s structure in far
flung off areas have proved unviable. The solution therefore has been to operate banks through
diverse set of players--- such as Postal Department, Telecom Companies, which promise to
reach people more effectively through technological advancements. This paper focuses on the
likely banking revolution in the country as a result of clearance for establishment of 11 Payment
Banks in India.
Conclusion
The introduction of Payment Banks in India is a major positive disruption to the banking sector
and would certainly see the cost associated with transfer of money or settlements reduce
dramatically for end users. Payment banks have been restricted in banking operations, as they
will not be allowed to carry out normal lending activities. It does raise questions about who
will serve credit needs of the unbanked. RBI suggests that Payment Banks will serve as a bridge
to allow people to eventually migrate to full-service banks, which is quite likely. When seen in
the background of limited access to the formal banking system, however, the need to introduce
newer forms of banks is the way to go, in the correct perspective. Payments banks will face
competition from the existing lenders. Besides, profitability will also remain a challenge as
they will be working on narrow margins. To this end, due to ever-growing customers’
expectations for faster-easier-simpler banking facilities what will drive the bankers is to work
with creativity and passion, which contributes to growth of cross sections of our society, and
so the challenges.
10 Dr.R.Srinivasan and Prof.M.Subramanian, (2015) “Payment Banks in India –
Demystified”
The buzz word in Indian banking industry, during the recent days are “Payment Banks”.
Reserve Bank of India(RBI) seems to be very cautiously-active in granting licenses to (a)
Payment Banks (b) Small Finance Banks in India. Common men are able to understand about
the logic and business behind the Small Finance Banks, but about the Payment Banks every
common man is raising their eye-brows (a) who are these payment banks? (b) Already we have
public sector banks, private sector banks, foreign banks and cooperative banks in
India, is there a requirement for these payment banks? (c) What are the value-added services
these payment banks going to offer in the banking sector? (d) Are these payment banks only
for enabling faster payments? (e) Will these payment bankers be a competitor for our existing
banks? (f) Are these payment banks a game-changer in the Indian banking industry? (g) Are
they really going to help the existing customers or driving for adding new unbanked customers,
through financial inclusion? Like the above illustrative list of questions, lots and loads of
queries are bubbling in our minds, for every now and then, these days. This paper aims at
demystifying the concept of “Payment Banks in India”.
Conclusion
With the entry of payment banks, the process of shifting money from bank accounts to wallets
will become truly seamless, and thus it is extremely possible that many customers may open
payment bank accounts in addition to their regular bank accounts. They may segregate small-

ticket payments from other bank payments by holding separate accounts. This is a key value
proposition and would be really a game change in Indian Banking System.
11 Sonu Garg and Dr. Parul Agarwal (2014) “Financial Inclusion in India – a Review of
Initiatives and Achievements”
Finance has become an essential part of an economy for development of the society as well as
economy of nation. For, this purpose a strong financial system is required in not only in under-
developed countries and developing countries but also developed countries for sustainable
growth. Through Financial inclusion we can achieve equitable and inclusive growth of the
nation. Financial inclusion stands for delivery of appropriate financial services at an affordable
cost, on timely basis to vulnerable groups such as low income groups and weaker section who
lack access to even the most basic banking services. In this paper, the researcher attempts to
understand financial inclusion and its importance for overall development of society and
Nation’s economy. This study focuses on approaches adopted by various Indian banks towards
achieving the ultimate goal of financial inclusion for inclusive growth in India and analyses of
past years progress and achievements. The relevant data for this study has been collected with
the help of from various Research journals, Articles, reports of RBI, reports of NABARD and
online resources.
Conclusion
Easy access to financial services will allow the population leaving in lower strata, to save
money safely and help in preventing concentration of economic power with a few individuals,
thus mitigating the risks that the poor could face as a result of economic shocks. Therefore,
providing access to financial services is becoming an area of concern for the policymakers as
it has far reaching economic and social implications.

RESEARCH METHODOLOGY
Research means searching facts. Research is simply the process of arriving as dependable
solution to a problem through the planned and systematic collection, analysis and interpretation
of data.
Re means again and again and Search means to find out something. Research is systematized
effort to gain new knowledge and result. The process used to collect information and data for
the purpose of making business decisions. Research is the process of systematic and in-depth
study or search for a solution to a problem or an answer to a question backed by collection,
compilation, presentation, analysis and interpretation of relevant details, data and information.
The simple definition laid down in the Advanced Learner’s Dictionary of current English is “a
careful investigation or inquiry especially through search for new facts in any branch of
knowledge.”
According to Robert Ross,
“Research is essentially an investing, a recording and analysis of evidence for the purpose
of gaining knowledge.”
The Random House Dictionary of the English language defines the term ‘Research’ as
A diligent and systematic inquiry or investigation into a subject in order to discover or

revise facts, theories, applications, etc.

RATIONAL FOR THE STUDY
Now a days it is era of digitalization, it is necessary to give more facilities to customers in
banking sectors. So any bank should provide digital facilities to its customers. Digital facilities
like ATM, net banking, mobile banking, debit card, credit card. Uses of all these it becomes
very easy and convenient to the customers of urban areas. It also improves the front-end
operations and helps in bringing down the transaction costs for the customers. Using digital
technologies, unexpectable growth are shown here.
Use of digital platforms can help consumers spend their money safely and securely, save and
build credit profiles for lending opportunities unavailable in the informal banking sector, and
participate in a growing online economy. Payment banks will essentially leverage technology
to bridge the last mile between bank branches and the remote customer living in a rural
hinterland.
The poorer citizens of the country who transact only in cash and do not have bank accounts are
the targets of these Payment Banks. They will target India’s migrant labourers, low-income
households and small businesses, offering savings accounts and remittance services with a low
transaction cost.
STATEMENT OF PROBLEM
“To study Financial factors affect success of payment bank.”
SIGNIFICANCE OF THE PROBLEM

(1) To the individual
This research will be helpful to me as individual as I will be learning how to carry out
quality research throw this project.
(2) To the society
This research will be helpful to the general public in the senses that they will get
information about Payment bank.

RESEARCH OBJECTIVE
 To know the concept and working of payment bank.
 To know the need of payment bank in India.
 To know the features and advantages of payment bank.
 To analysis the opportunities and challenges of payment bank.
SCOPE OF THE STUDY

The scope of the study is identify which financial factors affect success of payment bank
This is digital and paperless and at a bare minimum cost to that part of society that needs it
the most."
RESEARCH HYPOTHESIS
H0:- There is no significant difference between financial factors and success of payment
bank
H1:- There is significant difference between financial factors and success of payment bank
TYPES OF RESEARCH DESIGN
Explorative
Conclusive Descriptive
Causal

DATA SOURCE
There are mainly two types of sources of data primary data and secondary data
Primary Secondary
data data
PRIMARY DATA
The Primary data are original data which are collected for the first time for a specific purpose.
Primary data are the facts and figures that are newly collected for primary data collection. The
instrument which are used to collect the information from the primary data.
 Interview
 Questionnaire
 Observation
 Experiment
SECONDARY DATA
The Secondary data on the other hand, are those which have already been collected by some
other agency and which have already been processed. Secondary data may be available in the
form of published or unpublished sources. The instrument which are used to collect the
information from the Secondary data.
 Books
 Website
 Annual report of bank

DATA COLLECTION INSTRUMENT
An instrument is a mean of collecting data through which we collect the information’s required in
research.
The Instrument which are used to collect the information from the primary source are
 Interview
 Questionnaire
 Observation
 Experiment
Type of research Descriptive
Data collection method Primary data
Statistical tools Hypothesis
Data collection Questionnaire

instrument
Sample units 150
Sampling method Convenient probability
OUTLINE OF ANALYSIS
ANOVA testing
LIMITATIONS OF THE PROJECT

 Researcher’s experience in conducting research is limited
 Time restriction

CONCLUSION
The part innovation is expanding step by step. The different parts of India are developing at a
much fasters pace with the assistance of innovation. The achievement of internet managing an
account, portable keeping money and payment bank is likewise a consequence of the new
advancements that have come up and upgraded the client encounter and has additionally
advanced the saving money works in India. Today everybody has a cell phone in his/her hands.
The quantity of cell phone clients got second position on the planet. The expanding recurrence
of portable web client’s offers lift to the versatile managing an account. Internet relying upon
the other hand has additionally turned into the most critical piece of Indian managing an
account segment. It offers modern items and administrations to the customers with the
persistent item and process advancements. One of the issues related with web based managing
an account in India is that one can't access to web based keeping money in the event that he/she
don't have a web association and numerous country territories in India still don't have a web
association. Payment banks will be a distinct advantage. This is one of the real strides taken by
RBI in pushing the money related incorporation in the nation. This advancement is relied upon
to quicken India's adventure into a cashless economy.
Payment banks can be conceptualized and understood an entity similar to traditional banks but
catering to a niche area. The main aim of a payments bank is to provide small savings accounts;
payment services ensure delivery of subsides across all sections of households and rural people.
Today many people not have a bank account that in includes millions of people in our country.
We see that approximately 50 percent of the Indian population is unbanked and thus lacks
banking accounts and its faculties. Payments bank has provided secure cashless transactions
using the digital medium. Finally this excellent platform to achieve financial inclusion and RBI
has taken effective steps formulated policies and strategies for implementation of payment
banks successfully, many players have a good reach to all section of the society.

BIBLOGRAPHY
BOOKS REFERRED
 C.R.Kothari: “Research Methodology- method and techniques”, revised

Second edition, New Age International Publishers.
Website
https://en.wikipedia.org/wiki/Reserve_Bank_of_India
https://www.investopedia.com/terms/r/rbi.asp
http://www.isbtonline.com/banking-awareness-details.php?id=36&What-is-RBI-&-its-
Functions-?
http://abhinavjournal.com/journal/index.php/ISSN-2277-1166/article/view/1312
https://www.paisabazaar.com/financial-planning/articles/7148-what-are-payment-
banks-and-are-they-really-an-alternative-to-traditional-banks/
https://fintrakk.com/payment-banks-in-india-meaning-interest-rate-services-list-of-payment-
banks/
http://yojana.gov.in/public-account2jan.asp
https://www.airtel.in/bank/about
https://en.wikipedia.org/wiki/Airtel_Payments_Bank_Limited
http://www.hindustantimes.com/ranchi/nation-s-first-india-post-payments-bank-opens-in-
ranchi-raipur/story-YegzgDgJtfV8Tf0ndM18NM.html
https://www.dailyo.in/politics/asean-modi-trump-manila-indo-pacific-quad-
alliance/story/1/20555.html
http://www.livemint.com/Companies/oqjQhSMwWNlO9hCgKqrCoL/Paytm-to-start-payments-
bank-operations-from-23-May.html
https://en.wikipedia.org/wiki/Paytm

https://economictimes.indiatimes.com/industry/banking/finance/banking/fino-payments-bank-ties-
up-with-mother-dairy-and-gokul-dairy/articleshow/61561306.cms
JOURNALS
1 Dr. G. Sabitha Srinivas (2017) Financial Inclusion-Role of Payment Banks in India

2 Nidhi chandran (November, 2015) PAYMENT BANK – A NEED OF DIGITAL INDIA
3 Dr. (Mrs.) K. Meena Kumari (2017) India Post Payments Bank – Problems and Prospect
4 DR Ravi (May, 2017) Payment Banks: Emerging Challenges & Opportunities Of Cashless
Transactions In Indian Economy
5 Varun Kesavan August (2015) The Diversification Of Banks To The Era Of Payment
Banks By Reserve Bank Of India With Specific Reference To Indian Banking Sector
6 Madhavi Damle, Pushpendra Thenuan, Jimit Raval (2016) Genesis of Payment Banks: It’s
Stimulus On The Financial Inclusion In India
7 K.LOHITHKUMAR, D.MAHAMMAD RAFI, J.MAHABOOB RABBANI (NOV 2016)
Payment Banks In India: New Land Mark In Banking Sector
8 Gaurav Taneja, Narinder Kumar Bhasin (2016) Role of Payment Banks and Small Banks in
Achieving Financial Inclusion
9 Dr. J.C. Pande (2015) “Payment Banks” – A Newer Form of Banks to Foster
Financial Inclusion in India
10 Dr.R.Srinivasan and Prof.M.Subramanian, (2015) Payment Banks in India – Demystified
11 Sonu Garg and Dr. Parul Agarwal (2014) Financial Inclusion in India – a Review of
Initiatives and Achievements


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INTRODUCTION

Prepared By: Ayushi Thakar 1|Page

RESERVE BANK OF INDIA

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 It acts as a central bank of India.

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Reserve Bank of India (RBI), on 23rd September 2013 constituted a Committee on

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FUNCTIONS AND GUIDELINES ISSUED BY RBI

WHAT IS THE OBJECTIVE OF CREATING PAYMENT BANKS IN

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NEEDS OF PAYMENT BANK

OBJECTIVES OF PAYMENT BANK

 The main objective of the payment banks is to provide a secure technology-

WHO ALL ARE ELIGIBLE TO SET UP A PAYMENTS BANK?

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IMPACT OF EXISTING BANK

HOW PAYMENT BANKS ARE DIFFERENT FROM TRADITIONAL

Item Payment Banks Traditional Banks

Technology driven, low Through bank branches,

Unbanked/under banked Mostly reside in metros,

Prepared By: Ayushi Thakar 9|Page

Yes (maximum of Rs. 1.0

Can issue debit / ATM

Can engage in lending

Can issue credit cards No Yes

Can distribute third

Regulated by RBI Guidelines RBI Guidelines

WHAT THE PAYMENT BANKS CAN DO?

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WHAT THE PAYMENTS BANKS CANNOT DO?

 No NRI deposits should be accepted

WHAT ARE THE SERVICES OFFERED BY PAYMENT BANKS IN

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 Mobile banking can be accessed through these payment banks.

HOW IS A PAYMENTS BANK DIFFERENT FROM A COMMERCIAL

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1) Inclusion of remote rural areas:

2) Reduction of Black Money:

3) Secure medium minimizing the need for ATMs:

4) Efficient implementation of subsidy schemes:

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7) Impact on traditional Banks:

ADVANTAGES OF PAYMENT BANK

A NARROW BANKING MODEL

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ONE SEGMENT ONE PRODUCT

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MAJOR PLAYERS OF PAYMENT BANK

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Airtel payment bank type Public company

industry Financial services

Area served India

Parent Bharti Airtel LTD

CEO Shashi Arora

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INDIAN POST PAYMENT BANK

 Indian post payment bank is second payment bank in India.

PAYTM PAYMENT BANK

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