Financial inclusion: RBI issues draft norms for small & payment banks

The central bank also issued draft guidelines for setting up of payment banks, which will cater to marginalised sections of society, including migrant labourers, for collecting deposits and remitting funds.

Such banks can be set up with a minimum capital of Rs 100 crore as against Rs 500 crore required for normal commercial banks, according to the guidelines.

‘Both payments banks and small banks are 'niche' or 'differentiated' banks, with the common objective of furthering financial inclusion,’ the RBI said while issuing draft guidelines for licensing of payments banks and small banks.

The proposed small banks will provide a whole suite of basic banking products such as deposits and supply of credit, but in a limited area of operation, it said.

On the other hand, payments banks will offer a limited range of products such as acceptance of demand deposits and remittances of funds. They will have a widespread network of access points particularly in remote areas, either through their own branch network or through business correspondents (BCs) or through networks provided by others.

Foreign investments in these new category banks would be as per the FDI policy.