Skip to main content

Due diligence must before applying for payments bank

Reserve Bank of India ( RBI) Governor Raghuram Rajan has asked firms to not apply for a payments bank licence only because it is a valuable property. The central bank had earlier, too, cautioned that they incur a significant cost in assessing the applicants and so firms should apply only if they are completely committed.
“Don’t just go in for licence because it’s a valuable property to have but instead do the due diligence on your own. And when you apply, it should be with the intent of fully carrying out,” Rajan said. The RBI governor said the central bank was “ not overtly perturbed” that a few firms have decided to drop their payments bank plans after they were granted an in- principle licence last year.
“We are not overly perturbed that some people decided after analysis that they would not go forward. In fact it suggests that licencing has been adequately liberal and that we have a variety of players coming in,” he said.
Tech Mahindra, Cholamandalam Investment and Finance Co and a consortium of Dilip Shanghvi, IDFC Bank and Telenor Financial Services are the three players who have in the past couple of months announced that they would not be pursuing their plans to launch payments banks.
With this, now there are only eight players of the 11 which were approved by RBI to open these niche banks in order to further the regulator’s financial inclusion plans. These eight players are Reliance Industries, Aditya Birla Nuvo ( Idea Cellular), Airtel, Vodafone, Department of Posts, FINO PayTech, National Securities Depository and Paytm.
Rajan said payments banks work particularly well for companies that have an existing base of operations and several contact points that can be leveraged upon. “ The classic example is somebody affiliated with mobile company with many kiosks through which you can do cash in cash out.” These payments banks are allowed to provide small savings accounts and payments/ remittance services. They are also permitted to accept deposits of up to Rs.1 lakh but cannot lend or issue credit cards.
Business Standard New Delhi, 08th June 2016

Comments

Popular posts from this blog

Shrinking footprints of foreign banks in India

Shrinking footprints of foreign banks in India Foreign banks are increasingly shrinking their presence in India and are also becoming more conservative than private and public sector counterparts. While many of them have sold some of their businesses in India as part of their global strategy, some are trying to keep their core expertise intact. Others are branching out to newer areas to continue business momentum.For example, HSBC and Barclays Bank in India have got out of the retail business, whereas corporate-focused Standard Chartered Bank is now trying to increase its focus on retail “Building a retail franchise is a huge exercise and takes a long time. You cannot afford to lose it,” said Shashank Joshi, Bank of Tokyo-Mitsubishi UFJ’s India head.According to the Reserve Bank of India (RBI) data, foreign banks’ combined loan book shrunk nearly 10 per cent from Rs 3.78 trillion in fiscal 2015-16 to Rs 3.42 trillion last financial year. The banking industry, which includes foreign banks…

GST Refund of Rs 20,000 Cr Pending: Exporters’ Body

GST Refund of Rs  20,000 Cr Pending: Exporters’ Body Refund of over Rs 20,000 crore on account of Goods and Services Tax (GST) is pending with the government with more than half the amount stuck as input tax credit, Federation of Indian Export Organisations said on Tuesday. While claims over Rs7,000 crore were cleared in March, the amount was Rs 1,000 crore in April.However, after exporters’ request, the GST council and tax department are organizing a second phase of Special Refund Fortnight starting May 31, which will enable exporters to draw their refunds at a speedy pace. Many exporters have been unable to file the refund of input tax credit due to technical glitches, exports and claim happened in different months. The major challenge lies on ITC refund especially because the process is partly electronic and partly manual which is cumbersome and add to the transaction cost, the exporters’ body said. On IGST, refunds are getting delayed due to airline and shipping companies not submitt…

RBI rushes in to prop up falling rupee

RBI rushes in to prop up falling rupee India’s central bank reportedly intervened in the currency markets on Monday to prevent a further slide in the local unit, which breached the 67 mark to a dollar for the first time in 15 months amid a widening trade gap and runaway import bills fuelled by high crude-oil prices. Some state-owned banks were seen selling dollars aggressively, interventions that market dealers attributed to the central bank’s strategy to stem the decline of the Indian rupee against the US currency. The rupee is the worst performing among a dozen Asian monetary units in the past three months. It lost 4.25 per cent to the dollar during the period, show data from Bloomberg. On Monday, the Reserve Bank of India (RBI) is said to have sold about Rs 800 million collectively on the spot and exchange traded futures markets, dealers said. An email sent to RBI remained unanswered until the publication of this report. The currency market has seen such a strong central bank interven…