Payments Banks

Payments Banks are specialised banks created to make basic banking and digital payment services more accessible, especially for unbanked and underbanked sections of society. They can accept deposits and provide payment-related services, but they cannot give loans.

Why were Payments Banks Introduced?

The concept of Payments Banks was introduced in 2014 based on the recommendations of the Nachiket Mor Committee.

The idea was to bring formal banking services closer to people who often have limited access to traditional banks, including low-income households, migrant workers, small businesses and people in remote areas.

Legal and Regulatory Framework

It operate under the regulatory framework of the Reserve Bank of India (RBI). They are required to:

• Be incorporated as a Public Limited Company under the Companies Act, 2013.
• Obtain a licence under the Banking Regulation Act, 1949.
• Comply with the RBI Act, 1934, FEMA, 1999, and Payment and Settlement Systems Act, 2007.
• Maintain the prescribed minimum capital requirement of ₹100 crore.

Key Features

Savings and Current Accounts

It can open savings and current accounts for customers. However, they cannot accept deposits from Non-Resident Indians (NRIs).

Deposit Limit

A customer can maintain a maximum balance of ₹2 lakh in a Payments Bank account, subject to applicable RBI regulations.

No Lending

The most important feature of Payments Banks is that they cannot provide loans or advances.

They can provide services such as:

• ATM and debit cards
• Digital payments
• Fund transfers
• Remittance services

However, they cannot issue credit cards.

CRR Requirement

Payments Banks are required to maintain the prescribed Cash Reserve Ratio (CRR) with the RBI.

Payments Banks in India

The Payments Banks listed in the source material are:

• Airtel Payments Bank
• India Post Payments Bank
• Fino Payments Bank
• NSDL Payments Bank
• Jio Payments Bank

Paytm Payments Bank: Cancellation of Licence

According to the source material, the RBI cancelled the banking licence of Paytm Payments Bank Limited under Section 22(4) of the Banking Regulation Act, 1949, effective from the close of business on 24 April 2026.

The RBI cited concerns relating to the bank’s operations, management and compliance with the conditions of its licence.

Reasons Cited by the RBI

• Section 22(3)(b): The bank’s operations were considered detrimental to its own interests and those of its depositors.
• Section 22(3)(c): The management’s conduct was considered contrary to the interests of depositors and the public.
• Section 22(3)(e): Continuing the bank’s operations was considered not to serve a meaningful purpose or public interest.
• Section 22(3)(g): The bank failed to meet the conditions attached to its Payments Bank licence.

Why are Payments Banks Important?

Payments Banks help bring basic financial services to people who may otherwise remain outside the formal banking system. By focusing on small deposits, digital payments, remittances and accessible banking, they support India’s broader goal of financial inclusion.

FAQs on Payments Banks

What is a Payments Bank?

A Payments Bank is a specialised bank that can accept deposits and provide payment services but cannot provide loans.

When were Payments Banks introduced?

The concept was introduced in 2014 on the recommendations of the Nachiket Mor Committee.

Can Payments Banks provide loans?

No. Payments Banks cannot provide loans or advances.

What accounts can Payments Banks offer?

They can offer savings and current accounts.

What is the maximum deposit limit?

The maximum balance permitted for a customer is ₹2 lakh, subject to RBI regulations.

Can Payments Banks issue credit cards?

No. They can issue debit/ATM cards but cannot issue credit cards.

Who regulates Payments Banks?

Payments Banks are regulated and supervised by the Reserve Bank of India (RBI).

What is the main objective of Payments Banks?

Their main objective is to promote financial inclusion by making basic banking and payment services accessible to underserved sections of society.