The Indian economic structure has been fully reframed by demonetization. People are depending more on paperless transactions nowadays and tend to use digital payment portals. It has given a sudden boost to earlier outcast e-wallets or mobile wallets. Payment banks are the main niche of such online gateways. One needs to acquire a payment bank license to start any payment gateway.
Payment Bank is approved by the Reserve Bank of India (RBI). The maximum amount of money currently reserved for these types of Banks is INR 1 lakh per client which will be continuously upgraded. Both current and savings accounts can be operated under this Bank.
Payment banks shall be licensed under the Companies Act, 2013 as a public limited company. And accredited under Section 22 of the Banking Regulation Act, 1949, subject to certain licenses to regulate their operations, in particular with regard to the reception of payments necessary and the provision of services.
They can provide a service that links to bank cards, online banking, and ATM cards Payment Bank is also known as a split Bank will be allowed to set up shops (branches), ATMs, business books, etc. However, it will be limited to the activities authorized by the Bank under the Banking Regulation Act, 1949. The minimum amount paid by the bank to pay will be one hundred thousand. These payment banks are licensed and certified under a regulatory body.
Legalraasta will simplify your licensing process by providing services in Delhi NCR, Gujarat, Mumbai, Bengaluru, Chennai, and all other cities in India.
Payments Bank refers to a new bank model that the Reserve Bank of India (RBI) conceptualized in 2014. Such banks may accept a limited deposit of up to a maximum limit of approximately 100,000 per customer, which is further increased. While payment banks are a recent addition to the banking industry, the issuing of loans and credit card facilities is not advantageous. While payment banks provide a range of other services, such as debit cards, ATM cards, mobile banking, net banking, etc. In addition, a bank can run both current and saving accounts by acquiring payment banking licenses.
Under the Banking Regulation Act, 1949, the payment bank or differentiated bank is allowed to build new outlets such as Automated Teller Machines (ATMs), Business Correspondents (BCs), but banks do not start operations. It should also be 100 crores or more of the minimum paid-up capital of the payment bank.
Current non-bank Prepaid Payment Instrument (PPI)issuers approved under the 2007 Act on Payment and Settlement Systems.
NBFCs ( Non-Banking Finance Companies)
Professionals or Individuals
Corporate Business Correspondents (BCs)
Supermarket Chains
Public Sector Entities
Real Sector Cooperatives owned by residents
Mobile Telephone Companies
Companies (Public companies)
In addition, if it has a joint venture with an existing scheduled commercial bank, a promoter/group of promoters may be eligible for a Payment Bank License.
Under these government bodies/laws, a Payment Bank must be registered:
Companies Act, 2013;
Reserve Bank of India Act, 1934;
Banking Regulation Act, 1949
Payment and Settlement Systems Act, 2007
Foreign Exchange Management Act, 1999
DICGC Act, 1961 (Deposit Insurance and Credit Guarantee Corporation )
And other relevant rules and laws that can occur from time to time.
Offers Up to 1 Lakh Deposit
Only deposits up to a maximum of 1 lakh can be approved by the payment banks. The clients have to comply with the designated limit, and at any point in time, no one can pass that limit. One may choose to completely or partially deposit a number. RBI has set that end in order to protect the interest of the consumer and in terms of the almost new existence of such banks.
Facility for Virtual Debit Cards
The payment bank, which provides both physical and virtual debit cards, is another unique feature. The debit cards give users the benefit of using all ATMs at domestic borders, including abroad. There are no additional cash withdrawal charges required on virtual debit cards. The actual debit cards are often accompanied only by an annual fee.
Smooth Transactions via an online portal
Payment banks streamline the process of making and getting money across digital channels, unlike conventional banks. It allows clients to move online funds to providers such as NIFT, IMPS, and many others.
Feasible Banking Payment Mode
Given where you live, since it operates digitally, you can easily obtain the services of payment banks. Payments Banks minimize the need to visit a physical bank in order to deposit or withdraw money. By simply succeeding in a payment bank license, anyone can start a payments bank business online without needing a physical outlet.
Payment Bank requires at least Rs 100 crore as Paid-up Equity Capital.
Also, the Payment Bank is required to have at least 15% of its RWA (Dangerous Goods) satisfaction rate at any higher percentage as may be determined by the RBI (Reserve Bank of India) from time to time.
Tier I Capital must have at least 7.5% of the assets at risk.
Tier II Capital should be limited to 100% of the total Tier I Capital total.
Payment Bank is not permitted to deal with complex products. This means that the CAR (Capital Adequacy Ratio) is determined in accordance with the Basel Committee criteria.
Payment Bank may accept deposits up to a certain limit. The term “deposits” includes the current Deposits from small businesses and Individual Deposits.
NRIs are not allowed to make any money from payment banks.
Payment banks may issue ATMs or Debit Cards.
Payment Banks are not allowed to perform borrowing activities;
Payments Bank must do its job of KYC (Know Your Customer) / AML (Anti Money Laundering) and CFT (Combating Financial Terrorism) like any other bank.
The payment bank may issue ATMs or bank cards but it is not allowed to provide credit managers and Visa.
Payment Bank can enjoy payments and remittance services through ATMs (Automated Teller Machines) and BCs (Business Contacts) and mobile banking. Payment or remittance services may include cash transfers through various channels such as branches and BCs and cash payments on the other hand, by Automated Teller Machines (ATM) and BCs (Business Contacts) branches.
Payment Bank may issue prepaid payment instruments in accordance with the instructions provided under the Payment and Settlement Instrument Act, 2007.
Payment Bank may provide Internet Banking services.
Payments Bank maybe the Business Correspondent (BC) of another bank, subject to the RBI (Reserve Bank of India) guidelines for BCs.
Payment Bank can serve as a channel for receiving cash from banks under a payment system approved by the Reserve Bank of India, such as RTGS / NEFT / IMPS.
Payment Bank is authorized to administer Border Money Purchases in the form of personal payments or cash transfers to a current bank account.
Payment Bank is not permitted to establish subsidiary companies to perform NBFC (Non-Banking Financial Company) operations.
Payment Bank may pay service bills on behalf of its customers and the general public.
Payment Bank is authorized to perform non-hazardous activities to share financial services with the prior approval of the RBI. It also needs to satisfy all the regulatory requirements of such a product.
Documents Required On The Individual Promoter:-
● Promoter’s name, residence status, date of birth, PAN No., parents’ names, branch, bank account details, and credit bureaux.
● Complete and detailed information on the experience and background of each promoter, business, and financial track record, his expertise, details of the direct and indirect interests of the promoter in several organizations or industries or companies, etc.
Documents Required On The Business Promoting The Bank:-
MoA and AoA, Shareholding pattern of the promoter entity, organizational stocks pattern, development finance financial statements for the past 5 years (Include important economic indicators), and income tax returns for the past 3 years.
Documents Required On The Entities And Individuals In The Promoter Group:-
● The names of individuals and organizations, executives, and business structures of all businesses, share details, pictogram organogram representing the structure, shares, and the total assets of the entities.
● Submit annual reports for the past 5 years for all group organizations.
Step 1: First, the applicant must establish a Public Limited Company under the Companies Act, 2013, as per RBI regulations, where the primary aim should remain to act as a payment bank.
Step 2: Now, file an application to issue a payment bank license to the Chief General Manager of RBI.
Step 3: The External Advisory Committee (EAC) will review the application and invite the applicant to verify the details submitted by the applicant.
Step 4: If the applicant successfully meets the eligibility process, the RBI will issue him a license.
Step 5: After the previous step, the name of the applicant concerned will be displayed on the official RBI site.
Step 6: Finally, after obtaining official authorization to operate as a payment bank from the Reserve Bank of India, the bank must be established within 18 months.
Payments Bank is not allowed to accept NRI deposits.
Also, the Payment Bank requires a minimum payment amount of crores of Rs 100.
The payment bank may issue ATMs or bank cards but it is not allowed to provide credit managers and Visa.
Payment Bank is authorized to accept current deposits and deposits from Investment Funds Bank from the private sector up to a certain limit.
Payment Bank needs to accept RBI (Reserve Bank of India) compliance in Web-Banking, Data Security, Cyber Laws, Electronic Banking, and Technology Risk Management.
Payments Bank must use the term ‘Payments Bank’ in its name to distinguish it from other banks.
Payment banks are actually a solid system that provides great assistance to its customers. Even if you have an existing account with a traditional bank, the payment bank will help you access banking services and make transactions.
Since the activities of a traditional bank at some point, one should adhere to regular banking times; however, payment banks discard any such limitations and offer seamless transactions at any time.
Therefore, payment banks eliminate the need to keep track of time while going to the branch to make any transaction.
Another significant benefit that payment banks offer is digital cash. About 90% of transactions in India were based on money before making a demon. Its past results have boosted the growth of payment banks with their emphasis on digital transactions.
Therefore, payment banks are expected to be a change in the game and change the current banking system. It will bring banking on a wider scale.