You are here: Home » Economy & Policy » News
Business Standard

RBI unhappy over payments banks' licence surrender, hints at penalty

However, surrendering licences is not a crime and current regulations do not enable the central bank to charge a penalty, said RBI deputy governor SS Mundra

Topics
Rbi

Anup Roy  |  Mumbai 

Power reforms may pressure states' budgets: RBI

Reserve Bank of India (RBI) Deputy Governor S S Mundra on Monday expressed his displeasure at applicants surrendering their payments bank licences and hinted at hefty penalty for firms who indulge in such practices.

Two months after Cholamandalam dropped its plans for floating a payments bank, Dilip Shanghvi of Sun Pharma, IDFC Bank and Telenor Financial Services last week said they were not interested in establishing the niche bank either, without giving any reason. “Yes, we would certainly feel a little aggrieved because a lot of efforts from the part of the RBI goes in processing these applications. So, having done that, if they don’t materialise, that’s the only point (of disappointment),” Mundra said at the sidelines of an event by Banking Codes and Standards Board of India. However, surrendering licences is not a crime and the current regulations do not enable the central bank to charge a penalty, he said.

“Currently, we don’t have a scope of charging a serious processing fee, which can be forfeited if this kind of exercise is done,” Mundra said, adding, in jest: “But if we learn by experience, probably we can do something, which can help augment our revenue substantially.”

It took RBI more than a year to finalise on the 11 names, which are fit to operate payments banks — niche players that can accept deposits up to Rs 1 lakh but cannot lend. RBI’s draft guidelines on payments banks came on July 17, 2014 and the list of 11 awardees were announced on August 19, 2015. The nine entities remaining now are Reliance-SBI combine; Aditya Birla Nuvo (Idea Cellular), Airtel, Vodafone, Department of Posts, FINO PayTech, Tech Mahindra, National Securities Depository Ltd, and Paytm (Vijay Shekhar Sharma).

Assuring that the central bank did not go by a merit list to pick up the top applicants, but gave licences to anyone who fit the bill, the deputy governor said the question of replacement did not arise.

“The question of replacement will come if you have a pre-determined number, that was not the case. All applications that met the eligibility norms were given the licences,” Mundra said.

Mundra also said RBI is working on rules that would limit a customer’s liability in case of cyber frauds. While there is already a cap of Rs 10,000 for every cyber fraud that can happen, the RBI would like to have a relook on it as technology and banking channels have undergone changes.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, May 24 2016. 00:23 IST
RECOMMENDED FOR YOU
.