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FIRSTPUBLISHED:MON,DEC012014.0105AMIST
Payments,smallbankstoringininnovation
Variouscompaniesplantoapplyforlicences.Tieupsandlowcostproductsexpectedtocome
forth
VivinaVishwanathan
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LatestNews
12:06PMIST
SamsungElectronicssaid
tolaunchTizen
smartphoneinIndia
12:03PMIST
ManufacturingPMI:
Wherestheneedfora
ratecut?
11:33AMIST
MarutiSuzukisdomestic
salesjump17%in
November
11:27AMIST
Gemsandjewellery
sharesrallyafterRBI
easesgoldimportrules
11:20AMIST
JetAirways,SpiceJet
sharesjumponhopesof
lowerjetfuelprices
Jayachandran/Mint
TheReserveBankofIndia(RBI)onThursdayreleasedthefinalguidelines
forlicensingofpaymentsandsmallbanks.Thesebanksareintendedto
covertheunbankedandunderbankedareasandincreasebanking
penetrationinthecountry,statedthecircular.Letstakealookatthe
changesthatthesebanksarelikelytobringinfinancialservices.
Editor'spicks
Whatsonoffer?
Accordingtotheguidelines,paymentsbankscanopensmallsavings
accountsandacceptdepositsofuptoRs
1lakhperindividualcustomer,and
.
provideremittanceservices.Thesebanksareallowedtoissueautomated
DRAWBRIDGE
tellermachines(ATM)ordebitcardsbutarenotallowedtoissuecredit
Rajanunderpressurebut
maynotobligegovtwitha
ratecut
cardsorlendinanyform.Paymentsbankscanalsodistributenonrisk
sharingsimplefinancialproductslikemutualfundunitsandinsurance
products,statedthecircular.
Smallfinancebanks,ontheotherhand,willbeallowedtotakedepositsas
wellaslendmoney,thewayothercommercialbanksdo,butthefocuswill
beonsmalllending.Theycanfinancesmallbusinessunits,smalland
WED,NOV262014.05
35PM
WED,NOV192014.04
58PM
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marginalfarmers,microandsmallindustriesandunorganizedsector
SixmonthsofModigovt:
Continuitywithchange
entities.Thesenolongerfacegeographicalrestrictionsonoperations.
Companiesthatarealreadypresentinthepaymentsorfinancespace
suchasprepaidpaymentissuersandnonbankingfinancecompanies
(NBFC)areconsideringapplyingforthenewlicences.Forinstance,
ItzCashCardLtd,FINOPayTechLtd,OxigenServicesIndiaPvt.Ltdand
CitrusPaymentSolutionsPvt.Ltdareplanningtoapplyforpaymentsbank
NGOsinnovatetokeep
Bhopalissuealive
licence.
NBFCssuchasShriramGroup,MuthootFinanceLtdandManappuram
FinanceLtdwanttoenterthebankingspaceandarestudyingthenew
guidelinestotakeadecision.Wereinterestedandourboardmembers
arestudyingthenewdirectivesofRBI.Wewillundertakeadecisionsoon,
saidGeorgeAlexanderMuthoot,managingdirector,MuthootFinance.
Consumptiononlydriver
TheRBIhasalsoallowedmobiletelephonecompanies,supermarket
SLIDESHOW
FRI,NOV282014.0744PM
PhotoEssay:GoGoa,goal
ofgrowth
chains,andothercompaniesandcooperativestosetuppaymentsbanks.
Also,acompanycanformajointventurewithanexistingscheduled
commercialbank.
TributespourinforPhil
Hughesas#PutOutYourBats
ALSOREAD
trends
DYK:Depositandwithdra
somecashdepositmachin
30yearsafterBhopalgas
THU,NOV272014.0946PM
Newformatsexpected
Smallfinancebanksandpaymentsbanksareexpectedtofurtherthe
Amazonhopesforrelief
asKarnatakataxchief
departs
FRI,NOV282014.0420PM
governmentsaimoffinancialinclusion.Withsmallsavingsandremittance
servicestargetedatlowincomehouseholdsandtheunorganizedsector,
thiswillhelpincreasefinancialpenetrationandfinancialsavings,andhelp
tragedy
THU,NOV272014.0250PM
TheexpositionofSt.Francis
Xavier
bringthecurrentlylargelyunorganisedremittancesandpaymentsystems
inIndiaintotheorganisedsector,Nomurastatedinareport.
AccordingtoWorldBankestimates,only35%ofIndiasadultpopulation
hasaccountswithfinancialinstitutions.Thedifferentialbankingwillbeable
toprovidemorepeopleaccesstoformalfinancialproducts.Forinstance,
thepaymentsbankwillhavetogivethestandardinterestrate,ifnotmore,
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LATESTNEWS
SamsungElectronicssaidtolaunch
TizensmartphoneinIndia
ondeposits,saidVishalNarnolia,bankinganalystatSMCGlobal
ManufacturingPMI:Wheresthe
needforaratecut?
SecuritiesLtd.
Willpaymentsbanksbeabletolaunchlowcostandinnovativeproducts?
Theywillbeabletogeneraterevenuebroadlyin3waysinterestfrom
depositonSLR(statutoryliquidityratio),feefromdistributingthirdparty
productssuchasmutualfundsorinsurance,andfromtransactionfeeson
anypayments.Thisabilitytoearnincomeshouldpushthecompaniesto
providelowcostproductstotheendconsumers,saidNarnolia.
Innovation,however,willbethekeytotheirsuccess.Withthelaunchof
MarutiSuzukisdomesticsalesjump
17%inNovember
Gemsandjewellerysharesrallyafter
RBIeasesgoldimportrules
JetAirways,SpiceJetsharesjumpon
hopesoflowerjetfuelprices
thesenichebanks,theonesizefitsallapproachwillcometoanendin
banking.Oncethesmallfinancebanksarelaunched,youwillseesimple
andbasicproductsthatworkfortheloweststrataoftheincomepyramid.
ThecommunitylendingapproachofNBFCswillbeextendedinabanking
setup,saidG.S.Sundararajan,groupdirector,ShriramGroup.
Competitioninthisspacewillworkinfavorofconsumers.Competitionto
getandretaincustomersinfinancialservicesbusinesswillgoup.Hence,
therewillbefocusontechnologytoprovideinnovativeproducts,said
PramodSaxena,founder,chairmanandmanagingdirector,Oxigen
Services.Thecompanyisplanningtoapplyforapaymentsbanklicence.
JitendraGupta,founderandchiefexecutiveofficer,CitrusPayment
Solutions,agreesthattherewillbeinnovation.Theexistingcommercial
banksarenotdoingjusticeintermsoftechnologyinthepaymentspace.
Withdedicatedpaymentsbanks,therewillbesignificantchangeinthe
paymentspace.Ifwehaveabankinglicence,wedonthavetodependon
anotherbankssettlementcycleforourcustomers.Also,wewillhave
accesstothefullATMnetwork,saidGupta.
Jointventureslikely
Whilemorebankswithinnovativeservicesandproductsisgoodnews,
thesemaynotbeindirectcompetitionwiththeexistingcommercialbanks.
AKotakInstitutionalEquitiesreportstated:...thesebanksmaynotemerge
asaseriousthreattothebankingsectorinthemediumtermasthey
continuetoworkinaverytightregulatoryenvironment.Privatebanksmay
looktoactaspromotersofpaymentsbanksratherthancompetitorsgiven
restrictionsoncredit.However,wewouldneedtowatchdevelopmentsin
smallfinancebanks.MostprivatebanksusetheservicesofNBFCstomeet
prioritysectorlending(PSL)requirements.AnyconversionofalargeNBFC
canimpactthemeetingoftheir(privatebanks)PSLrequirements.
Interestedpartieshavetosubmittheirapplicationsforlicencesby16
January2015.Oncethelicencesaregiven,companieshaveagestation
periodof18months.Whiletheguidelinesareout,itwilltakesometimefor
thedusttosettle,andforprospectiveparticipantstodecideifbeinga
paymentsbankorasmallfinancebankmakessense.Alsoitistooearlyto
sayhowaccessibletheirserviceswillbe.Hopefully,thesenewformatswill
beabletoworkinletterandspirit.
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