RBI granting payments bank licences is a significant step which will bring in more money into the system and spread the reach of banking to rural areas, Finance Minister Arun Jaitley said on Wednesday.
"RBI giving payments banks licences is a significant and important step. Payments banks will reach out to people in rural areas," Jaitley said.
The Reserve Bank on Wednesday granted "in-principle" approval to 11 entities, including Department of Post, Reliance Industries, Aditya Birla Nuvo, Vodafone and Airtel, to set up payments banks and proposed such licences ‘on tap’ in future.
Payment banking licence will allow companies to collect deposits (initially up to Rs 1 lakh per individual), internet banking, facilitate money transfers, and sell insurance and mutual funds. They can issue ATM/debit cards, but not credit cards.
"Payments bank will ensure more money comes into banking system. Various banks are looking at increasing their rural reach, including big banks like SBI, payments banks will help them realise this," Jaitley said.
SBI, the country’s largest lender, will take as much as 30 percent in RIL’s proposed bank.
The other entities which have been given ‘in-principle’ approval are Cholamandalam Distribution Services, Tech Mahindra, National Securities Depository Limited (NSDL), Fino PayTech, Sun Pharma’s Dilip Shantilal Shanghvi and PayTM’s Vijay Shekhar Sharma.
"The ‘in-principle’ approval granted will be valid for a period of 18 months, during which time the applicants have to comply with the requirements under the guidelines and fulfil the other conditions as may be stipulated by the Reserve Bank," RBI said.