Payments Banks: How RBI’s Move for Financial Inclusion Quickly Went Downhill
By Joel Robello, Ashwin Manikandan
Durable relationships are rarely transactional but frequent transactions could form the bedrock of solid relationships – and help achieve the federal objective of financial inclusion. Policymakers at Mint Road were guided by this noble thought when they granted payment bank licences four years ago to familiarise India with transaction modes that didn’t use currency bills.
In theory, the central bank was doing what was needed to extend organised banking services to those left unbanked by traditional lenders. In practice, however, business models of these new-age entities were not defined with sufficient clarity to underpin sustainable operations.
Photo courtesy of Peter Haden.