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Jul 18, 2014
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Payments Banks will not lend money
The Payments Banks that the Reserve Bank of India plans to licence will accept demand deposits — current and savings bank deposits — but will not undertake lending activities.
However, a Payments Bank can become a Business Correspondent (BC) of another bank for credit and other services which it cannot offer, according to the Reserve Bank of India’s draft guidelines on licensing of differentiated banks.The primary objective of setting up of Payments Banks is to further financial inclusion.
The banks will provide small savings accounts and payments/remittance services to migrant labour workforce, low-income households, small businesses, other unorganised sector entities, and other users. Going by the guidelines, these banks will not provide term deposit facility.
Source -
http://www.thehindubusinessline.com
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