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RBI Approves In-Principle Applications of 11 Entities for Payment Banks

The Reserve Bank of India (RBI) on Wednesday cleared 11 payment banks applicants among 41 received applications.  Reliance Industries, Airtel M Commerce, and Vodafone m Paisa were among others who have got the license. Experts suggest that in-principle approval to 11 entities to open payments banks will help in Indian government’s goal of financial inclusion. Also, it will broaden the reach of banking services.

RBI said it had chosen “different entities for their experience in different sectors and their capabilities so that different models could be tried”. The in-principle license is valid for only 18 months, and “during which time the applicants have to comply with the requirements under the guidelines and fulfil the other conditions as may be stipulated by the Reserve Bank,” RBI added.

Some of the applicants have already tied up with major banks of India. For example, Reliance Industries is partnering with State Bank of India, where the later will have a 30% stake. Similarly, Airtel M Commerce is tying up with Kotak Mahindra Bank Ltd, and Dilip Sanghvi Family and Associates (DSA) with Norwegian telecom company Telenor and IDFC LTD.             

 List of Payments banks Entities:

  1. Airtel M Commerce Services Ltd
  2. Vodafone m Paisa
  3. Reliance Industries Ltd
  4. Fino Pay Tech Ltd
  5. Aditya Birla Nuvo Ltd
  6. Department of Posts
  7. National Securities Depositary Ltd
  8. Cholamandalam Distribution Services Ltd
  9. Tech Mahindra Ltd
  10. Dilip Shanghvi


 What services these special virtual banks will provide?

  • This license will enable these companies to collect deposits up to 1 lakh per individual.
  • Internet banking
  • Facilitate money transfers
  • Selling insurance and mutual funds
  • Remittance services
  • Provide ATM/Debit Cards but no Credit Cards

How this will help in realizing government’s goal of financial inclusion?

  • The Modi led government has made financial inclusion as one of the key priorities in their government agenda. The launching of Pradhan Mantri Jan-Dhan Yojna was one of such steps to ensure that every house hold has at least one bank account. Under this scheme, 175.7 million bank accounts have been opened as of 12th August, 2015.
  • It is expected that payments banks will target financially excluded customers such as labourers and small businesses. It is expected that the savings will increase, because the customers now don’t have to visit retail banks every time they deposit. Indian Finance Minister, Arun Jaitley is quite optimistic about this new banking system and said “RBI giving payments banks licences is a significant and important step. Payments banks will reach out to people in rural areas”.
  •  Government Owned Department of Post have also got the license for this virtual system of banking. Communications and IT Minister Ravi Shankar Prasad said it is a proud moment for the postal department and it should become a vehicle for financial inclusion in the country.  The presence of 154,000 post offices across the country will surely provide an opportunity to bring the banking services to rural areas.
  • Even private entities are quite optimistic about the payments banks and they are promising to “bring millions of unbanked Indians into the folds of banking”.
  • However, there is also a section of the experts who are sceptical to this new banking services. For example, former SBI chairman Pradip Chaudhuri said “This is overcrowding of the space. I don’t know how these banks will fare in the future”.
  • Another section of sceptics said that RBI may face difficulty in regulating these virtual banks due to lack of previous experiences in this sector. They argue that in order to make this banking system successful, RBI itself will have to become more sophisticated.
  • It will be early to predict the success of payments banks, but it can’t be denied that its motive and objective are in a right direction.



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Just like an iris controls the light levels inside the eye making it possible for us to see the outside world, The Indian Iris aims at shedding light on the ongoing political affairs, policies and schemes of the Government of India (GOI) and those of the State Governments.

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