This refers to 'Is big always best?' by Probir Roy and Sumita Kale (February 20). Payment banks will be of different hues and colours based on the pedigree of the main player involved, like telcos, BCs, NBFCs, prepaid instrument issuers, and the post office. Their migration to true banking entities will be closely watched for some time. The Reserve Bank of India is likely to pick bigger players for a licence, as its first priority will be the success of the new model. If the low level of freedom given by RBI to Indian Banks Association is any indication, allowing industry associations to set standards for payment infrastructure is difficult to anticipate.
Direct benefit transfers (DBT) are also likely to remain a preserve of public sector banks (PSB) in view of the stinginess of government departments and owing to the latter's inclination to keep a hold on related account balances. Only PSBs under the protection of RBI under its Lead Bank Scheme/State Level Bankers Committees can face the pressure of the local administration. Payment banks, at least initially, will be well advised to excel with state-of-the-art technical capabilities, concentrate on the remittance corridors and try capturing the business of private individuals, who will also pay reasonably.
Y P Issar Karnal
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