Payments Banks Seek ₹5 Lakh Deposit Limit and Microfinance Lending
Why in the news
Payments banks met the Finance Ministry in a meeting chaired by DFS Secretary M. Nagaraju and sought a higher deposit limit and permission to lend in microfinance.
Key facts
- Deposit cap: ask to raise from ₹2 lakh to ₹5 lakh per account; last hike in April 2021 (₹1 lakh to ₹2 lakh).
- They want microfinance lending with regulated caps; today funds go only into government securities.
- Fino Payments Bank has applied for an SFB licence.
| SFB conversion rule | Requirement |
|---|---|
| Operating period | Five years |
| Minimum paid-up equity | ₹200 crore |
About payments banks
- Introduced by RBI to offer deposits, withdrawals and remittances, mainly digitally, to the unbanked and underbanked; they cannot give loans or credit cards.
- Of 11 licences given in 2015, six are active: Airtel, Paytm, India Post, Fino, NSDL and Jio. RBI has barred Paytm Payments Bank from taking deposits or onboarding customers.
- IPPB was praised for financial inclusion, with 650 branches and over 163,000 access points.
Exam angle
- Current deposit cap per account: ₹2 lakh.
- Payments banks cannot issue loans or credit cards.