Dos and Don'ts of payments banks

Payments banks will be able to take deposits and remittances but will not be allowed to lend

India's leading mobile carriers Bharti Airtel Ltd and Vodafone India were among the 11 companies selected by the country's central bank to set up payments banks aimed at granting millions of citizens access to formal banking.

Energy-to-telecoms conglomerate Reliance Industries Ltd, a joint venture of Aditya Birla Nuvo Ltd and Idea Cellular Ltd, and the country's postal office were also among successful applicants, the Reserve Bank of India said on Wednesday.

Dos of payments banks

* Has to use the word ‘Payments Bank’ in its name to differentiate from other banks

* Accept demand deposits, i.e., current deposits, and savings bank deposits from individuals, small businesses and other entities

* To hold a maximum balance of Rs one lakh per individual customer.

* Will be allowed to set up branches, ATMs, BCs

* Allowed to issue debit cards also offer internet banking

* Can accept a large pool of money to be remitted but at the end of the day the balance should not exceed Rs one lakh

* Can accept remittances to be sent to or receive remittances from multiple banks

* Permitted to handle cross border remittance transactions in the nature of personal payments / remittances on the current account

* Allowed to distribute mutual fund products, insurance products and pension products

* Bank can also undertake utility bill payments

Don’ts of payments banks

* No NRI deposits should be accepted    

* Cannot issue credit card

* Not allowed to set up subsidiaries to undertake non-banking financial services activities    

* Other financial and non-financial services activities of the promoters should not be mingled with the working of payment banks