RBI stresses on shared infrastructure for payments banks

Sharing resources and ensuring functional interoperability will keep costs in check for payments banks

The Reserve Bank of India (RBI) has suggested payments banks that have been granted the in-principle licence to ensure there is sharing of infrastructure among banks. The regulator believes this will help achieve the spirit of financial inclusion more efficiently.

“The idea by the banking regulator is that there should be sharing of resources and functional interoperability which will also allow us to keep the costs under check,” said one of the applicants, who had attended the meeting last week.

For payments banks keeping a check on the cost will be an important concern. As part of the mandate, these banks need to reach the unbanked area where infrastructure sharing will become a key to ensure cost efficiency, say analysts.

Shinjini Kumar, leader (banking and capital markets) at PwC India, explains this sharing of infrastructure will lead to more efficiency in the system. “New banks will be required to fulfil the expectation of payment access points within 15 minutes of walking distance. This will necessitate better automated teller machine (ATM) infrastructure. Common infrastructure such as white label ATMs (WLAs), micro ATMs and cash recyclers may be desirable to achieve this goal, driving the creation of common infrastructure and collaboration,” Kumar said in a report.

The sharing of infrastructure has already begun with certain payments and small finance banks looking at tying up with WLA players. The cost structure works out for the niche banks with the cost of setting up an ATM being Rs 3-5 lakh while the cost of maintaining it is Rs 25,000-40,000 a month. However, if the bank opts for a tie-up with the WLA operator, then they only have to pay the interchange fee (the amount a bank has to pay a white-label ATM operator if its customer makes a transaction on the latter’s ATM).

Recently, out of the 42 applicants for payments bank licence, RBI granted in-principle licence to 11 applicants. Payments banks can accept deposits of up to Rs 1 lakh and offer current and savings account deposits. They can also issue debit cards and offer internet banking. But they are not allowed to lend or issue credit cards.

On the other hand, payments have asked RBI for further flexibility in the investment regime. According to the current rules, payments banks need to invest 75 per cent of the demand deposit balances in government securities and treasury bills with maturity up to one year.