Q: 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?
a) Mobile telephone companies and supermarket chains that are owned and controlled by residents are eligible to be promoters of Payment Banks
b) Payment Banks can issue both credit cards and debit cards.
c) Payment Banks cannot undertake lending activities.
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.
In case you still have your doubts, contact us on 9811333901.
For UPSC Prelims Resources, Click here
For Daily Updates and Study Material:
Join our Telegram Channel – Edukemy for IAS
- 1. Learn through Videos – here
- 2. Be Exam Ready by Practicing Daily MCQs – here
- 3. Daily Newsletter – Get all your Current Affairs Covered – here
- 4. Mains Answer Writing Practice – here
