A new kind of no-frills bank could kickstart India’s long-awaited mobile money revolution
Wednesday, July 23, 2014
The Reserve Bank of India (RBI) is one of the few institutions Indians respect (paywall). India’s central bank is known for being clean, sensible, and well-run. It is also extremely cautious. That is one reason India has remained a laggard in the mobile money revolution sweeping the poor world.
That may soon change. The RBI this month issued a set of draft guidelines (pdf) for the establishment of a new kind of bank in India, called a “payments bank.” Such banks would not be allowed to lend—one of the core functions of anything that usually wants to call itself a bank. Instead, they will be restricted to accepting and cashing out deposits and remittances. And the first to apply for these licenses will be mobile operators.