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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.