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.

As a minimum pay-up capital of 100 crores is required, the Reserve Bank of India has laid down a long list of qualified players for the Payment Bank license. Let’s take a sneak peek at the qualifying promoters who can execute the licensing procedure for 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.

In India, the Capital Requirements to get a Payment Bank License are:

• 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.

The names of all the businesses and individuals in the promotional group (including non-financial, financial, and overseas businesses) with the details listed below:

1. Incorporation Date
2. The activity of the business
3. Registered Office address,
4. PAN, TAN & CIN Number
5. Account number
6. Income Taxation to which the business belongs,
7. Branch and its business account detail
8. Credit and business services managers (registration details in cases controlled by SEBI)
9. List details (in stock sales) for businesses

Now that you have a good look at payment banks, you should be interested in setting them up. Therefore follow these steps to obtain a payment bank license:

• 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.

Required Compliance Bank Payments in India can be summarized as:

• 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.

Before getting into trouble with the documentation and the broader licensing banking system, it is important to determine the position of payment banks in the coming years.

• 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.

At present, Payments Banks intend to convert to SFBs (small financial banks) can only apply for such a license after five years of operation. In practice, existing banks (PBs), which have completed five years of service and are citizen-controlled, are also eligible to be transformed into SFBs (small financial banks) after complying with all regulatory and legal requirements of various authorities and guidelines.

According to the RBI, the minimum wage for SFBs was ordered at ₹ 200 Crore. In contrast, certain regulations will be amended to further strengthen the role of UCBs in promoting investment and reducing the risk of harassment in co-operative banking (urban) presentations. In addition, it has decided to bring in UCBs with assets of ₹ 500 Cr. and more, under the CRILC reporting framework (“Central Credit Information Center”).

Legalraasta is one of the channels that coordinates and links you to consistent practitioners to fulfill both your legal and financial requirements. Yeah, with our legal service, our customers are delighted. They have consistently regarded us highly and given frequent updates because of our emphasis on simplifying legal requirements.
Our clients can also keep track of the progress on our website at all times. Our professional representatives are just a phone call away if you have any concerns about the Payment Bank License process. Legalraasta can guarantee that it is charming and smooth for your contact with professionals.