Apropos the report, "Rajan allays concern on payments banks" (August 21), the Reserve Bank of India (RBI) being the authority empowered to grant licences, it was quite logical that its governor, Raghuram Rajan, would assure bankers on the issue. But what about the opinion of the banks, especially the public sector ones that are likely to be affected by this new institution - the payments banks?
When the country's largest lender, State Bank of India, and its chairperson, Arundhati Bhattacharya, expresses concern, other bankers would chip in too with theirs. Let us examine a few facts about payment banks (PB).
First, PBs would eat into the risk-free fee business of public sector lenders. Remitters would switch to PBs because of convenience of transacting payments. Second, the inordinate delay faced by small-time remitters in public sector banks would make them opt for PBs. Third, PBs are capable of providing hassle-free platform to remitters.
The best course of action for public sector banks is to join the race. SBI has done the right thing by collaborating with the Reliance group to float a PB. Other public sector banks should join the fray through similar collaborations.
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