Payments bank licences given arbitrarily: Swamy

Brilliant economist-statistician and ruling Bharatiya Janata Party (BJP) leader Subramanian Swamy on Saturday termed the Reserve Bank of India’s (RBI) decision to grant in-principle approval to 11 entities for payments banks as “arbitrary and malicious”. “These were chosen from 41 applicants who wanted to start payment systems. The manner in which 11 payments banks were shortlisted is inconsistent with the rule of law. It is not clear how the Reserve Bank of India came to the number of 11 payments banks, or why licences were denied to the others...

“The arbitrary and malicious decision (of the Reserve Bank of India) appears to be a big scam...,” 

Swamy said in a statement. From the very outset, he said, it is not clear why the Reserve Bank of India chose to use the Banking Regulation Act, 1949, to licence payments banks when Parliament has made a separate law for governing payments systems under the Payments and Settlement Systems Act, 2007.

Although the Reserve Bank of India stated that the 11 entities were chosen by an external evaluation committee, Swamy pointed out, “Without casting any aspersions on the members of the committee, this is, sadly, not a due process of law.”

“There is no explanation on how the committee evaluated each <g data-gr-id="30">criterion... ,</g>” he said, adding that the Reserve Bank of India did not provide for review or appeal by rejected applicants. “This too is a violation of the rule of law”. Swamy further said that there would have been no problem had the Reserve Bank of India granted 30 payments banks licences instead of 11. “It would have promoted more competition and reduced costs to consumers.” 

Payments banks are allowed to collect deposits (initially up to Rs 1 lakh per individual), offer Internet banking, facilitate money transfers and sell insurance and mutual  funds. Besides, they can  issue ATM/ debit cards but not  credit cards.