Reserve Bank of India has increased the maximum balance limit at the end of the day for payments banks to Rs 2 lakh. The earlier limit was Rs 1 lakh. This decision has been taken to enhance financial inclusion. The apex bank's announcement comes over a long-standing demand of the payments bank sector.
"The extant 'Guidelines for Licensing of Payments Banks' issued on November 27, 2014 allow payments banks to hold a maximum balance of Rs 1 lakh per individual customer. Based on a review of performance of payments banks and with a view to encourage their efforts for financial inclusion and to expand their ability to cater to the needs of their customers, including MSMEs, small traders and merchants, it has been decided to enhance the limit of maximum balance at end of the day from Rs 1 lakh to Rs 2 lakh per individual customer. A circular in this regard shall be issued separately," stated a notification from RBI.
RBI had given in-principle approval to 11 entities to start payments banks on April 15. Airtel Payments Bank was the first to launch, followed by India Post Payments Bank (IPPB). Paytm too has its payments bank, called Paytm Payments Bank. Payments banks cannot accept fixed or recurring deposits and are not allowed to give any form or loan or issue a credit card.
Additionally, the RBI extended RTGS, NEFT money transfer facilities to beyond banks. The apex bank said that membership to RBI-operated Centralised Payment Systems (CPSs) was only limited to banks so far. "Over the last few years, the role of non-bank entities in payment space (e.g. Prepaid Payment Instrument (PPI) issuers, Card Networks, White Label ATM (WLA) operators, Trade Receivables Discounting System (TReDS) platforms), has grown in importance and volume, as they have innovated by leveraging technology and offering customised solutions to users. To reinforce this trend and encourage participation of non-banks across payment systems, it is proposed to enable, in a phased manner, payment system operators, regulated by the Reserve Bank, to take direct membership in CPSs," stated RBI in a notification.
Also read: RBI pegs retail inflation at 5% for Q4 FY21
Copyright©2023 Living Media India Limited. For reprint rights: Syndications Today