BackRBI Policy: Payments bank balance limit doubled to ₹2 lakh
Payments banks have been seeking a hike in the end of day limit for some time now, especially after the government increased the deposit insurance limit to ₹5 lakh
PremiumThe Reserve Bank of India (RBI) has doubled the maximum limit of funds account holders of payments bank can keep in their bank account to ₹2 lakh.
The regulator had earlier restricted the end-of-day balance in an account holder's savings account to ₹1 lakh.
"With a view to furthering the financial inclusion and to expand the ability of payments bank to cater to the growing needs of their customers, the current limit on maximum end of day balance of ₹1 lakh is being increased to ₹2 lakh per customer with immediate effect," said RBI Governor Shaktikanta Das.
Most payments banks had a tie-up with a partner bank. If an individual's end-of-day balance crossed ₹1 lakh limit, payments banks transferred the excess funds into a sweep-in, sweep-out deposit with the partner bank.
According to the Paytm Payments Bank's website, "At the end of each day, the amount in your account that is more than ₹1 lakh is swept out into a fixed deposit with our partner bank".
Even India Post Payments Bank (IPPB) transferred balances above ₹1 lakh to the Post Office Savings Account. For this, a customer had to sign up for Post Office Savings Account and link it with the IPPB savings account.
According to the Statement on Developmental and Regulatory Policies document of RBI, the regulator hiked the fund limit "to expand payments banks' ability to cater to the needs of their customers, including micro, small and medium enterprises or MSMEs, small traders and merchants.
RBI will issue a circular in this regard separately.
Payments banks have been seeking a hike in the end of day limit for some time now, especially after the government increased the deposit insurance limit to ₹5 lakh.
RBI had launched payments banks for financial inclusion. The objective was to offer small savings accounts, payments and remittance services to the migrant labour workforce, low-income households, and small businesses. They are similar to schedule commercial banks but offer limited services. For example, they cannot issue ATM or debit card, but the regulator does not permit them to issue credit cards.
(Do you have personal finance queries? Send them to mintmoney@livemint.com and get them answered by industry experts)
Milestone Alert!Livemint tops charts as the fastest growing news website in the world 🌏 Click here to know more.
