• It was set up based on the recommendations of the Nachiket Mor Committee.
• It aims 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.
• Features
  • These operate on a smaller scale.
  • The minimum paid-up equity capital for payments banks shall be Rs. 100 crores.
• Activities Involves
  • 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 that it cannot offer.
• Actives 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.

Source: The Hindu