Q4. The establishment of ‘Payment Banks’ is being allowed in India to promote financial inclusion. Which of the following statements is/are correct in this context?
- Mobile telephone companies and supermarket chains that are owned and controlled by residents are eligible to be promoters of Payment Banks
- Payment Banks can issue both credit cards and debit cards.
- Payment Banks cannot undertake lending activities.
Select the correct answer using the code given below.
a) 1 and 2 only
b) 1 and 3 only
c) 2 only
d) 1, 2 and 3
The correct answer is 1 and 3 only.
- Payment Banks
- It is like any other bank, but operating on a smaller or restricted scale.
- Credit risk is not involved with the Payments Bank.
- It can carry out most banking operations but cannot advance loans or issue credit cards. Hence statement 2 is not correct and Statement 3 is correct.
- It can accept demand deposits only i.e. savings and current accounts, not time deposits.
- The Payment Banks cannot set up subsidiaries to undertake non-banking financial services activities.
- A committee headed by Dr. Nachiket Mor recommended setting up of ‘Payments Bank’ to cater to the lower income groups and small businesses.
- It can Accept demand deposits.
- It can Issue ATM/Debit cards, but can’t issue credit cards.
- Eligible to be promoters of Payment Banks:
- Existing non-bank Prepaid Payments Instrument (PPI) issuers,
- NBFCs Corporate Business Correspondents,
- Mobile phone companies, supermarket chains, public sector entities, real sector cooperatives, etc. Hence statement 1 is correct.
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