Friends, in today’s article we will get information about Payment Bank. Read this article carefully so that the information related to the payment bank can reach you.
In the month of August 2015, RBI had given in-principle approval to 11 institutions for payment banks. This included big names like Reliance Industries, Aditya Birla and Tech Mahindra. In the year 2013, RBI board member Nachiket Mor had formed a committee to promote small scale industries and people having small arrivals. In this committee a recommendation was made to set up a payment bank. The concept of payments bank shares some degree of similarity with the pre-paid instrument provider (PPI).
Under PPI and Payment Bank
You have to deposit money, in return, they provide you the facility of a digital wallet which you can use within an app on your mobile.
Digital wallets can be used for different types of payments, such as to buy medicine, electricity bill, water bill, telephone bill and mobile recharge etc.
Nachiket Mor had formed a committee in the year 2013 for the purpose of removing the limitation which was kept in the PPI. After this, he put the concept of payment bank in front of everyone. The question must be arising in your mind that after all, what was the fault in PPI due to which the concept of payment bank had to be brought?
- PPI, payment and settlement act of 2007 is regulated by RBI.
- PPI does not give you interest for the money deposited which is not beneficial for the poor and small business people.
- In this you can deposit money up to Rs 50000. Although you cannot withdraw it, you will have to spend it through the card.
- Whenever you spend money from its digital wallet, then you will have to pay 0.5% charge on every transaction.
- There are many examples of PPI such as Airtel Money, Flipcard Wallet, Paytm and ZIPCASH etc.
- Now RBI should stop licensing companies for PPIs. Despite this, if a company wants to apply for such a facility, then they should apply for a payment bank license.
After all, why Payment Bank?
- PPI does not pay interest on the money deposited.
- The basic concept is good as you read money into the payment wallet and make cashless payments to pay bills.
- Theoretically, the PPI model is good but does not pay interest on the money deposited, this is its biggest drawback.
Last Final Word
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