Reserve Bank of India panel suggests new set of banks for financial inclusion
Wednesday, January 8, 2014
Mumbai: A Reserve Bank of India (RBI) panel has recommended that a special category of banks, called payments banks, be set up to widen the spread of payment services and deposit products to small businesses and low-income households in Asia’s third-largest economy, where about 40% of the population still do not have access to formal financial services.
Such banks will have a minimum entry capital requirement of Rs.50 crore, one-tenth of what a full-service bank requires, since they will have a near-zero risk of default, said the panel headed by Nachiket Mor, a member of RBI’s central board. Payments banks will be required to comply with all RBI guidelines relevant for commercial banks.
Existing banks should be permitted to create a payments bank as a subsidiary, the panel has said.