Notes for small bank and payment bank..

Banking Awareness -

Important point about Small and payments bank

■Some similar point uses in both banks: Small banks and payment banks:

》In case of Small banks and payments bank, The Minimum capital requirement would be Rs.100 cr.

》Foreign Shareholding in small and payments banks will be as per current FDI Policy

》Voting rights to be line with the existing guideline for private banks

》In these banks, Entities other than promoters will not be permitted to have shareholding in excess of 10 percent.

》These bank should comply with the corporate governance guidelines, including ‘Fit and proper’ criteria for Directors as issued by Reserve bank of India.

》Operation of the bank should be fully networked and technology driven from the begging

■Small bank:■

》The main purpose of small banks will be provide a whole suite of basic banking products such as deposit and supply of credit, but in limited area of operation.

》Objectives for these bank small banks to increase financial inclusion by provision of saving vehicles to under-served and unserved section of population, supply of credit to small farmers and micro and small industries.

》If you are start small bank, it must resident individuals with 10 yr of experience in banking and finance, companies and societies will be eligible as promoters to set up small banks.

》 In case of small banks, NBFC, micro finance institution (MFIs) and local area bank (LABs) can convert their operation into small banks.

》Branch expansion for the initial three years, prior approval will be required

》The small bank shall primarily undertake basic banking activities of accepting deposit and lending to small farmers, small business, micro and small industries, and unorganized sector entities.

■Payment bank:■

》Payment bank is to increase financial inclusion by providing small saving account, payment/remittance service to migrant labour, low income households, and small business.

》Payment bank can be a non –bank PPIs, NBFCs, Corporate, Mobile telephone companies, super market chain real sector cooperative companies and public sector bank. It can take equity in payment banks.

》It can be accepted demand deposit only current account and saving account. 

》Payments banks would initially be restricted to holding a maximum balance of Rs.1 lac per customer.

》Payments banks can offer payment and remittance services, issuance of prepaid payment instruments, internet banking for other banks.

》They cannot setup subsidiaries to undertake NBFC Business.

》Payment banks would be required to use the word “payment ‘it is named to differentiate it from other banks.

》There will be no Credit Lending is allowed for payments banks.