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RBI Cancels Paytm Payments Bank Licence for Breach of Payments Bank Guidelines
The RBI has flagged that Paytm Payments Bank has failed to adhere to licensing guidelines for payments banks under the Banking Regulation Act, 1949. The issue is currently relevant for regulatory compliance in differentiated banking.
Payment Banks in India:
| Dimension | Key Details |
|---|---|
| Origin | Payment Banks have been recommended by the Nachiket Mor Committee in 2014. |
| Definition | A Payment Bank is a financial institution operating on a smaller scale with minimal credit risk under differentiated banking licenses. |
| Differentiated Banking Licenses | Differentiated banking licenses provide for specialized banking services to specific customer segments. |
| Other DBL Institutions | Other institutions under differentiated banking licenses include Small Finance Banks. |
| Objective | Payment Banks provide for financial inclusion by serving unbanked and underbanked populations such as migrant workers and low-income households. |
| Advantages | Payment Banks provide for digital payments, safe small transactions, and reduced cash dependency. |
| Registration | Payment Banks are registered under the Companies Act, 2013. |
| Governance Laws | Payment Banks are governed by the Banking Regulation Act, 1949; RBI Act, 1934; Foreign Exchange Management Act, 1999; and Payment and Settlement Systems Act, 2007. |
| Capital Requirement | Payment Banks must have a minimum paid-up capital of ₹100 crore with promoters holding at least 40% for the first five years. |
| Investment Norms | Payment Banks maintain 75% of funds in SLR securities and 25% with banks. |