Payment Banking: The next Big Shift of Financial Inclusion
The monetary system in India has endorsed remarkable changes since the time of liberalization. The reformations in banking sector & change in technologies are the main attributes for the success of banking & allied sector. A greater participation from the foreign sector, as well as the private sector, has been the game changers.
The RBI Governor is performing experiments to boost-up the Indian economy by making suitable changes into current framework. This structure will be put in the place forward for growth. These new type of niche bank was proposed in the “Nachiket Mor” Committee Report on ‘Comprehensive Financial Services for Small Businesses and Low-Income Households’. These are expected to be the game changers for India in expanding banking services. RBI expected that this will play a vital role in bringing millions of unbanked Indians into the folds of the banks, which is now possible by embracing the rural population.
New mode like Payment Banking license, will manage to significantly reduce the cash usage in the economy increase the flow of digital money somehow cut back the corruption and contemplated to meet credit & remittance needs of small business, unorganized sector, low-income households, farmer & migrate workforce, this kind of availability of fund advance the era.
The judgment of RBI is in favor for both the financial sector and transforming India. Payment banks are no threat; in fact, they are feeders to the universal banks. These banks have the account to regulate the flow so that the whole capital come under the radar to universal banks.Which obviously is the main reason for selecting different sector.
Payments bank would be permitted to set up its own outlets such as branches, Automated Teller Machines (ATMs), Business Correspondents (BCs), etc. to undertake only certain restricted activities permitted to banks under the Banking Regulation Act, 1949. Initially be restricted to holding a maximum balance of Rs. 100,000 per individual customer and with greater mobile money transfers and payments the dream of a cashless society can be realized as well as leakages in the system will reduce.
International experience shows that mobile money transactions and these financial innovations have been a very successful in small economy countries. These banks thus will add a much-needed financial inclusion dimension to the banking system. Over the next decade or so their functioning has the potential to bring about another revolution in the banking sector.