About Payment banks
- Payment banks are the new age banks with limited facilities. These banks mostly operate through the small vendors and shopkeepers. It exists in between the mobile wallet and regular banks.
- A payment bank provides following services to its customers.
- Accept demand deposits ( restricted upto Rs.1 lakh)
- Remittance services
- Mobile payments
- Fund transfers
- Debit card and associated services
- Net Banking services
- Sell third-party financial products like insurance and mutual funds
- They can’t offer loans
- The Reserve Bank expects payment banks to target India’s migrant labourers, low-income households and small businesses, offering savings accounts and remittance services with a low transaction cost.
Why in News?
- The Reserve Bank of India (RBI) has doubled the maximum limit of funds account holders of payments banks to Rs 2 lakh from Rs 1 lakh earlier with immediate effect to expand the ability of such lenders to cater to the needs of MSMEs and other businesses.