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Introduction
The term “Payment Banks” is new and seems to have been invented in Indian context. In
September 2013, a “Committee on Comprehensive Financial Services for Small Businesses
and Low Income Households”, headed by NachiketMor, was formed by the RBI. By January
2014, the NachiketMor committee submitted its final report and one of its recommendations
was the formation of a new category of bank called payments banks.
The above was followed by announcement in Union Budget 2014-2015 (presented on July
10, 2014) wherein it was decided that “After making suitable changes to current framework,
a structure will be put in place for continuous authorization of universal banks in the private
sector in the current financial year. RBI will create a framework for licensing small banks and
other differentiated banks. Differentiated banks serving niche interests, local area banks,
payment banks etc. are contemplated to meet credit and remittance needs of small businesses,
unorganized sector, low income households, farmers and migrant work force”.
Taking cues from the Budget, RBI issued the draft guidelines in July 2014 itself on payments
banks and small banks as differentiated or restricted banks. Based on the feedback RBI
came out with final guidelines for Payment Banks in November 2014, and called the
applications from entities which are interested to start such banks.
We can define a Payment Bank in India as a type of bank which is a non-full service niche
bank. A bank licensed as a Payments Bank can only receive deposits and provide
remittances. It cannot carry out lending activities. Thus, Payment Banks can issue ATM/debit
cards, but can not issue credit cards as they are not empowered to carry out lending activities.
We can sum up the objectives in one sentence that these banks have been created to help
India reach its financial inclusion targets. This type of bank can be highly useful for migrant
labourers, low income households, small businesses, and other unorganized sector entities.
RBI in its guidelines says “the objectives of setting up of payments banks will be to further
financial inclusion by providing
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Some Regulations for Payment Banks:
The minimum paid-up equity capital for payments banks shall be Rs. 100 crore. For the first
five years, the stake of the promoter should be 40% minimum. Foreign shareholding will be
allowed in these banks as per the rules for FDI in private banks in India. The bank should be
fully networked from the beginning. The bank can accept utility bills. It cannot form
subsidiaries to undertake non-banking activities. Initially, the deposits will be capped at Rs.1,
00,000 per customer, but it may be raised by the RBI based on the performance of the bank.
The bank cannot undertake lending activities. 25% of its branches must be in the unbanked
rural area. The bank must use the term "payments bank" in its to differentiate it from other
types of bank. The banks will be licensed as payments banks under Section 22 of the Banking
Regulation Act, 1949 and will be registered as public limited company under the Companies
Act, 2013. The banks must maintain CRR, minimum 75% of demand deposits in
government bonds of up to one year and maximum 25% in current and fixed deposits with
other scheduled commercial banks for operational purposes and liquidity management.
On 17 July 2014, the RBI issued the draft guidelines for payment banks, inviting suggestions
and comments from interested entities and general public.
On 27 November 2014, final guidelines for payments banks were released by the RBI.
On 4 February 2015, the RBI released the list of the entities which have applied for the
payment banks.
On 28 February 2015, during the announcement of the Annual Budget, it was declared that
India post will run a payment bank through its large network in the country.
On 19 August 2015, the RBI gave an in-principle approval to 11 entities to set up payment
banks.
The RBI had received 41 applications for payment banks; however, it offered licence to only
11 of them:
4. Department of Posts
5. FinoPayTech Limited
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6. National Securities Depository Limited
9. Shri Vijay Shekhar Sharma (CEO of One Communications, which runs PayTM)
1 To study the product usage and practices of payment’s bank among dibrugarh university
students.
2. To measure the attributes that influences students to choose payment’s bank services.
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CHAPTER – 2
REVIEW OF LITERATURE
2. Introduction of fiscal incentives for consumers capped at INR 2,000 per capita per year for
five years as well as reducing 50 percent of the merchants’ corporate tax liability on 50
percent of their revenues.
5. Adoption of open loop payment systems for mass transit that enable citizens to use bank-
issued contactless chip cards to make transit payments, and allow individual payment
networks to undertake settlement at the backend, as recommended in the Reserve Bank of
India’s Payment Vision 2018.
Achieving these outcomes would have far-reaching benefits, as India’s cost of cash would
drop from 1.7 percent of GDP to 1.3 percent of GDP during this time. This would result in
savings of INR 70,000 crores (USD 10.4 billion) over the next five years and cumulative
savings of INR 4.7 lakh crores (about USD 70 billion) over the next ten years. Needless to
say, the time for further action is upon us.
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(Dr.R.Srinivasan, Prof.M.Subramanian)2Although through the channelization of payment
banks Indian economy will certainly move towards the less cashless economy as well as
promote the financial inclusion up to a certain perceptible extent. Less cashless economy will
pave the way for universal availability of banking services to all. Payment banks will
certainly bring the easiness to the lives of common man. Digital payments bring in greater
efficiency and transparency in welfare programme as money is remitted directly into the
accounts of the beneficiary. Payments can be easily traced and collected. In Indian economy,
there persists the digital divide among the rural areas. E- Wallets and mobile payment
systems need a smart phone and an internet connection, but less than a quarter of the
population owns a smart phones. Fast and reliable internet connection is expensive and it is
difficult to find Wi-Fi hotspots and mobile phone battery charging stations.
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Chapter 3
Research Methodology
Research Design
The research design adopted for the study was a descriptive survey. This design is considered
apt because it enables the researcher to generate data through the standardized collection
procedures based on highly structured research instrument(s) and well defined study concepts
and related variables.
Data collection
Data is recorded measure of phenomena. While deciding about the method of data collection,
the researcher should keep in the mind about two types of data. They are, Primary Data and
Secondary Data.
Primary data represents the first hand raw data that have been specifically collected for the
current study. Primary data are raw, unprocessed and yet to receive any type of meaningful
interpretation. For the given study a well-structured and self-constructed questionnaire was
administered to the respondents to obtain the primary data.
Secondary data can be usually gathered at faster and economical manner than the primary
data. However the data may not fit in the researchers information need. The secondary data
for the study has been obtained from various journals, books and internet websites.
Period of time
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Chapter 4
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Table 2: Distribution of respondents according to Departments.
no.of respondents
60 50
40
17
20
0
0
yes no can't say
no.of respondents
INTERPRETATION-From the above table we can say nearly 70% of people are aware of
payment’s bank.
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Table 4.3 Table showing responses of using payment’s bank services for online transaction
among respondents.
no.of respondents
60
48
50
40
30
20
10 2
0
yes no
no.of respondents
Interpretation:From the above table we can say that 96% of the student uses payment’s
bank for online transaction.
Table 4.4 Table showing responses of most preferred payments bank services by respondents.
no.of respondents
30
26
19
20
no.of respondents
10
5
0
Airtel pay Tm india post
Interpretation:from the above table we can say that 52% of students prefer airtel payment’s
bank services followed by paytm and India post.
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Table 4.5 Table showing the attributes that influences the respondents to use payment’s bank.
0 10 20 30 40 50 60
Series 4 no.of respondents
Interpretation-From the above table we can say that (a).quality of service and (b).ease of use
are the attributes that mostly influences the people to use payment’s bank, whereas location
and technology used are the least preferred attribute.
Table 4.6 Table showing the frequency of use of payment’s bank by respondents.
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no.of respondents
30
24
25
20
15 13
10 8
5 3 2
0
always very often sometimes rarely never
no.of respondents
Interpretation-from the above table we can say that 43% people uses payment’s bank very
often, whereas only 9% of students rarely or never uses payment’s bank services.
Table 4.7 Table showing whether respondents would prefer other mode of transaction over
payment’s bank.
no.of respondents
60 49
50
40
30
20 10
10
0
yes no
no.of respondents
Interpretation-From the above table we say that 80% of people prefers payment’s bank
mode for transaction than other available mode.
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Table 4.8 Table showing rating of factors by respondents according to their level of
satisfaction.
12
Ease of opening account 4 15 45
1 4
Customer services 13
8 41
2 30
Deposit limit 28
34
2 8
services provided 2728
2
45
Interest rate 11
19 28
3
E-payments 2 4 6
52
2
2
Ac. Information/balance inquiry
2 3031
1 14
Conveniently located 29
3 20
0 10 20 30 40 50 60
Interpretaion-we can say that (a) E-payments (b) Ease of opening account, are the factors
that mostly satisfies people to choose payments bank followed by customer services and ac
information, whereas interest rate is the least chosen factors among the others.
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Chapter 5
Findings:
4. Quality service, ease of use and reduced time for transaction are the most preferred
attribute.
5. Majority of students prefer payments bank for online transaction over other available
modes.
6. Factors like ease of opening account and e-payments, provides more satisfaction in
choosing payment’s bank services
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Conclusion:
With the entry of payment banks, the process of shifting money from bank accounts to
wallets will become truly seamless, and thus it is extremely possible that many customers
may open payment bank accounts in addition to their regular bank accounts.Payment Bank
play crucial role in banking sector because of its have there is no restriction on the income
levels of those who wish to open accounts in payment banks, those who have salary accounts
in regular bank accounts can also open an account in a in payment’s bank.
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