Development Banks – 04
The objectives of setting up of payments banks will be to further financial inclusion by providing
(1) Small savings accounts
(2) payments/remittance services to migrant labour workforce, low-income households, small businesses, other unorganised sector entities and other users.
They will not lend to customers and will have to deploy their funds in government papers and bank deposits.
- Acceptance of demand deposits-Payments bank will initially be restricted to holding a maximum balance of 100,000 per individual customer.
- Issuance of ATM/debit cards-Payments banks, however, cannot issue credit cards.
- Payments and remittance services through various channels.
- Business Correspondents (BC) of another bank, subject to the Reserve Bank guidelines on BCs.
- Distribution of non-risk sharing simple financial products like mutual fund units and insurance products, etc.
- The payments bank cannot undertake lending activities
Criteria for setting up Payment banks
Existing non-bank Pre-paid Payment Instrument (PPI) issuers; and other entities such as individuals / professionals; Non-Banking Finance Companies (NBFCs), corporate Business Correspondents (BCs), mobile telephone companies, supermarket chains, companies, real sector cooperatives; that are owned and controlled by residents; and public sector entities may apply to set up payments banks.
The minimum paid-up equity capital for payment banks shall be Rs. 100 crore. Maintains minimum 75% of deposits in Government bond and maximum 25% deposits with other scheduled commercial banks.
Micro units development and refinance agency (aka MUDRA) was launched in 2015 responsible for regulating micro and small enterprise financing business. Its mandate includes Laying down policy guidelines and registriring MFI, accreditation and rating. It has a capital of 20000 crore to refinance for medium and small enterprises. The MUDRA bank will offer loans under 3 categories:
- Shishu – for upto Rs. 50000
- Kishore – upto 5 lakh
- Tarum – upto rs.10 lakh based on the stage of the business.
Its major aim is to develop the MSME sector in India on which a huge population is dependent.
Indian Post and Payment bank
IPPB is a wholly-owned subsidiary of Department of Post, with 100% Government of India equity. It is a payments bank of the Indian postal department which will work through a network of post offices\. It will be governed by Reserve Bank of India (RBI). While its services will be available to all citizens, the IPPB will primarily focus on serving social sector beneficiaries, migrant labourers, un-organised sector, Micro Small and Medium Enterprises (MSMEs), Panchayats, low-income households, in rural areas and the unbanked and under-banked segments in both the rural and urban areas. IPPB will offer services through a mix of physical and digital platforms.
Channels for delivering services will include Counter operations, ATMs/micro ATM, Doorstep, mobile and internet banking, Pre-paid instruments such as mobile wallets, PoS, MPoS, etc, It will initially have 650 branches and 3,250 access points in post offices across the country. All the 1.55 lakh post offices in the country are targeted to be linked to the IPPB system by December 31, 2018.
Its values are:
- Ease of banking
- Digital ecosystem
Functions of IPPB
It will accept deposits, offer remittance services, mobile banking and third-party fund transfers.
It offers 3 types of saving account:
- Regular Account – Safal,
- Basic Savings Bank Deposit Account (BSBDA) – Sugam and
- BSBDA Small – Saral
- The maximum limit on deposits for current and savings account is Rs 1 lakh.
- The bank offers a 4 per cent interest rate on savings account.
- They can issue debit cards and ATM cards, but they cannot issue credit cards and cannot loan money.
- It will provide social security payments like MNREGA wages, direct benefit transfer and give access to third-party services insurance, mutual funds.
- IPPB account holders will be issued a QR Code based biometric card with a unique QR code.