India’s new payment banks need a regulatory boost

Author: Brian Yap | Published: 2 Mar 2017

India has embarked on a national campaign to digitalise daily payment transactions but some small-scale regulatory moves needed to be made to enable new payment platforms to take off.

In September 2013, the Reserve Bank of India (RBI) set up a committee to study comprehensive financial services for small businesses and low-income households. This led to the introduction of specialised banks or payments banks to cater to them, with the central bank granting in-principle approval to 11 applicants who set up payments banks by August 19 2015.   

However, market participants argue the RBI should increase deposit limits for payment banks, and dilute listing requirements and mandatory shareholding requirement of 40% to be retained for the first five years if it is to boost the payment bank business.

"Though the small accounts with payment banks are subject to simplified know your customer, anti-money laundering and combating the financing of...