Skip to main content

Due diligence must before applying for payments bank

By
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

Post a Comment

Popular posts from this blog

Credit card spending growth declines on RBI gaze, stress build-up

By
  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the...
Post a Comment
Read more

SFBs should be vigilant, proactive to mitigate risks: RBI deputy guv

By
  The Reserve Bank of India’s Deputy Governor Swaminathan J on Friday instructed the directors of small finance banks (SFBs) to be vigilant and proactive in identifying emerging risks in the sector.Speaking at a conference for directors on the boards of SFBs, Swaminathan highlighted the role of governance in guiding SFBs towards sustainable growth with stability. He also emphasised the importance of sustainable business models.Additionally, he highlighted the need for strengthening cybersecurity to protect the entities against digital threats and urged for a stronger focus on financial inclusion, customer service, and grievance redressal to ensure a broader reach of banking services.Executive Directors S C Murmu, Rohit Jain, and R L K Rao, along with other senior officials representing the Supervision, Regulation, and Enforcement Departments of the RBI, also participated in the conference.   -  Business Standard  30 th  September, 2024
Post a Comment
Read more

Brigade Hotel Ventures files draft papers with Sebi for Rs 900 crore IPO

By
  Brigade Hotel Ventures Ltd, owner and developer of hotels in South India, has filed draft papers with capital markets regulator Sebi to raise Rs 900 crore through an initial public offering (IPO).The proposed IPO is entirely a fresh issue of equity shares with no Offer-for-Sale (OFS) component, according to the draft red herring prospectus (DRHP).Proceeds from the issue to the tune of Rs 481 crore will go towards payment of debt, Rs 412 crore will be allocated to the company and Rs 69 crore to its material subsidiary, SRP Prosperita Hotel Ventures Ltd.Additionally, Rs 107.52 crore will be used to purchase an undivided share of land from the Promoter, BEL, and the remaining funds will support acquisitions, other strategic initiatives, and general corporate purposes.The company may raise up to Rs 180 crore through a Pre-IPO Placement.   If the placement is undertaken, the issue size will be reduced.Brigade Hotel Ventures Ltd is a wholly-owned subsidiary of Brigade Enterprises ...
Post a Comment
Read more