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Posted 01 Feb 2024

Updated 16 Mar 2024

2 min read

  • PPB will not take fresh deposits in any customer accounts, prepaid instruments, wallets, FASTags etc., after February 29, 2024.
  • RBI exercised its powers under section 35A of the Banking Regulation Act of 1949.
    • RBI has taken action due to persistent non-compliance observed by external auditors and material supervisory concerns in the PPB.
    • RBI has broad powers to issue direction in the public interest or in the interest of banking policy under the act.

 

  • Payment banks: The Nachiket Mor committee suggested the introduction of specialised banks or ‘payments banks’ with the objective of financial inclusion.
    • They have to register as a Public Limited Company and obtain a license as per the Banking Regulation Act 1949.
    • They can carry out most banking operations but can’t advance loans or issue credit cards.
    • They can take deposits up to 2 lakh, issue debit cards, and provide mobile and internet banking facilities.

 

  • Challenges with payment banks
    • Lack of avenues for earning of revenue since they cannot lend
    • The need for a digital presence demands high investment in digital infrastructure
    • Competition from traditional banks offering mobile banking services, unified payments interface, etc.
  • Tags :
  • RBI
  • Payment Bank
  • Paytm Payment Bank
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