Specialised Banks
Payments Bank
- It was set up based on the recommendations of the Nachiket Mor Committee.
- Objective: To advance financial inclusion by offering banking and financial services to the unbanked and underbanked areas, helping the migrant labour force, low-income households, small entrepreneurs, etc.
- It is registered as a public limited company under the Companies Act 2013 and licensed under Section 22 of the Banking Regulation Act 1949.
- It is governed by a host of legislation, such as the Banking Regulation Act, 1949; RBI Act, 1934; Foreign Exchange Management Act, 1999, etc.
- Features:
- They are differentiated, and not universal banks.
- These operate on a smaller scale.
- The minimum paid-up equity capital for payments banks shall be Rs. 100 crores.
- Activities that can be performed:
- It can take deposits up to Rs. 2,00,000. It can accept demand deposits in the form of savings and current accounts.
- The money received as deposits can be invested in secure government securities only in the form of Statutory Liquidity Ratio (SLR). This must amount to 75% of the demand deposit balance.
- The remaining 25% is to be placed as time deposits with other scheduled commercial banks.
- It can offer remittance services, mobile payments/transfers/purchases, and other banking services like ATM/debit cards, net banking, and third-party fund transfers.
- It can become a banking correspondent (BC) of another bank for credit and other services which it cannot offer.
- Activities that cannot be performed:
- It cannot issue loans and credit cards.
- It cannot accept time deposits or NRI deposits.
- It cannot set up subsidiaries to undertake non-banking financial activities.
Small Finance Bank
- SFBs are specialised banks that are licensed by RBI to provide financial services and products to low-income individuals and underserved communities, including microfinance and micro-enterprise services, as well as other basic banking services.
- SFBs are granted the scheduled bank status after being operational and are deemed suitable under section 42 of the RBI Act, 1934.
- Objectives:
- To provide financial inclusion to these segments of the population who are often excluded from the traditional banking system.
- SFBs help them to have access to financial products such as small loans, savings, insurance, and other basic banking services.
- SFBs are registered as public limited companies under the Companies Act, 2013 and governed by Banking Regulations Act, 1949 and RBI Act, 1934.