Payments bank deposit limit doubled by RBI

  • Payments bank aims to further financial inclusion, especially through savings accounts and payments services
  • The central bank introduced payments banks in the country to enhance financial inclusion

Anulekha Ray
Updated7 Apr 2021
Reserve Bank of India
Reserve Bank of India(MINT_PRINT)

In a bid to promote digital payments banks in the country, the Reserve Bank of India (RBI) on Wednesday announced that it has increased the maximum end of day balance for payment banks to 2 lakh. Earlier, the limit was 1 lakh. Payments banks have been asking a hike in deposit limit for a long time.

"The extant 'Guidelines for Licensing of Payments Banks' issued on November 27, 2014 allow payments banks to hold a maximum balance of 1 lakh per individual customer. Based on a review of performance of payments banks and with a view to encourage their efforts for financial inclusion and to expand their ability to cater to the needs of their customers, including MSMEs, small traders and merchants, it has been decided to enhance the limit of maximum balance at end of the day from 1 lakh to 2 lakh per individual customer. A circular in this regard shall be issued separately," according to statement by Reserve Bank of India.

"With a view to furthering financial inclusion and to expand the ability of payments banks to cater to the growing needs of their customers, the current limit on maximum end of day balance of 1 lakh per individual customer is being increased to 2 lakh with immediate effect," RBI governor Shaktikanta Das said.

The central bank introduced payments banks in the country to enhance financial inclusion. The aim is to provide small savings accounts, payments and remittance services to migrant labour workforce, low income households, small businesses, other unorganised sector entities and other users.

In August 2015, RBI had given in-principle approval to 11 entities to start payments bank. Airtel Payments Bank was the first one to launch payments bank in the country. India Post Payments Bank (IPPB) had started operations at two pilot branches in January 2017. Some other popular payments bank are Paytm Payments Bank and Fino Payments Bank.

"This is a welcome move by the RBI after a long and hard fight by the payments bank. While the limits they expected were much higher, I hope this 100% increase will help boost the payment banks access to greater client network and improve digital transactions across the country," Anil Pinapala on founder and chief executive officer of Vivifi India Finance Private Limited said.

Payments bank aims to further financial inclusion, especially through savings accounts and payments services. These banks currently offer interest rates similar to that being offered by regular banks. As per RBI guidelines, payments banks can not accept fixed or recurring deposits. A payments bank is not allowed to give any form of loan or issue a credit card, which is also a form of unsecured personal loan.

The central bank also extended the National Electronic Funds Transfer (NEFT) and Real-Time Gross Settlement (RTGS) facilities to digital payments intermediaries. Till now, only banks were allowed to use RTGS and NEFT payments facility.

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