India Post Got Banking License from RBI

Reliance Industries, Airtel, Vodafone and India Post are among the 11 applicants given approval to set up payments banks by the Reserve Bank of India.

The 11 applicants granted in-principle approval to start a payments bank are --- Reliance Industries, Tech Mahindra, Aditya Birla Nuvo, Airtel M Commerce Services, Department of Posts, Fino PayTech, National Securities Depository Ltd (NSDL), Vodafone m-pesa , Cholamandalam Distribution Services and among individuals are Sun Pharma chief Dilip Shanghvi and PayTm founder Vijay Shekha Sharma, the list on the RBI website said.

The Reserve Bank had received 41 applications for payments banks by end of deadline in February this year.

“The Committee of the Central Board (CCB) of RBI has selected entities with experience in different sectors and with different capabilities so that different models could be tried. It did ensure that all the selected applicants have the reach and the technological and financial strength to service hitherto excluded customers across the country.

“Nevertheless, the in-principle approvals are subject to the condition {(15 (v)} in the guidelines, including any developments in on-going cases,” RBI said in a statement.

It also said that going forward, the Reserve Bank intends to use the learning from this licensing round to appropriately revise the Guidelines and move to giving licences more regularly, that is, virtually “on tap”. The RBI believes that some of the entities, who did not qualify in this round, could well be successful in future rounds.

“At its meeting on August 19, 2015, the CCB went through the applications, informed by the recommendations of the EAC and the ISC, and approved the announced list of applicants,” the statement further said.

Full service bank

RBI added that in arriving at the final list, the CCB noted that it would be difficult at this stage to forecast the most successful likely model in the emerging business of payments. The CCB further noted that payments banks cannot undertake lending, and therefore believed that the payments bank would not be subject to the same risks as a full service bank. Therefore, the CCB evaluated applicants to assess whether there would be unacceptable risk even to the narrower functions of a payments bank.

Payments banks can accept deposits of up to Rs. 1 lakh and can offer current and savings account deposits. They can also issue debit cards and offer internet banking. But they are not allowed to lend or issue credit cards.

During the Budget, the Finance Minister said, “After making suitable changes to current framework, a structure will be put in place for continuous authorization of universal banks in the private sector in the current financial year. RBI will create a framework for licensing small banks and other differentiated banks. Differentiated banks serving niche interests, local area banks, payment banks etc. are contemplated to meet credit and remittance needs of small businesses, unorganized sector, low income households, farmers and migrant work force.”

Guidelines

The Guidelines for Licensing of Payments Banks were first issued on November 27, 2014 after the Union Budget 2014-2015 presented on July 10, announced setting up of differentiated banks.

The process for selecting the applicants was detailed scrutiny undertaken by an External Advisory Committee (EAC) under the Chairmanship of Dr. Nachiket Mor, Director, Central Board of the Reserve Bank of India and was formerly with ICICI Group.

“The recommendations of the EAC were an input to an Internal Screening Committee (ISC), consisting of the Governor and the four Deputy Governors. This Internal Screening Committee prepared a final list of recommendations for the CCB, after independently scrutinising all the applications,” as per RBI.