No decision on setting up of 'Payments Banks' yet: Rajan

A decision on setting up 'Payments Banks' or specialised banks to provide services to small businesses will be taken only after looking into various aspects, including arbitrage issues, Reserve Bank of India Governor Raghuram Rajan said on Wednesday.

"At this point there is no decision to move forward.

“We will look at it in great detail, including what value it brings, the viability as well as whether it presents arbitrage opportunities vis-a-vis the Schedule commercial banks," he told reporters on the sidelines of Nasscom India Leadership Summit in Mumbai.

Rajan said only after looking into all issues, will the RBI firm up views on whether to ‘move forward and if so, under what structures’.

He was replying to a question related to setting up of such banks.

A RBI constituted panel on financial inclusion headed by Nachiket Mor had recommended the setting up of the payments banks in order to deepen access to finance.

It advocated setting up of 'Payments Banks' to provide payment services and deposit products to small businesses and low-income households with a maximum balance of Rs 50,000 per customer.

These banks, it said, can be set up with minimum capital requirement of Rs 50 crore (Rs 500 million), one-tenth of the Rs 500 crore required for a full-service bank.

Mor, whose report has set a target of having a bank extension within 15 minute walking distance for a citizen anywhere across the country, had later said it was not an uphill task.

In his address to the gathering, Rajan made several references to the recommendations of Mor panel, but underlined that the RBI is yet to take a call on their implementation.

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