A differentiated category of banks licensed by the RBI to accept small deposits and offer payments and remittance services, but barred from lending or issuing credit cards.
- Recommended by the Nachiket Mor Committee (2014); the RBI issued the first licences in 2015 to entities such as Airtel, Paytm and India Post.
- They can accept demand deposits up to a per-customer ceiling (raised to 2 lakh rupees per customer), but cannot give loans or issue credit cards.
- Deposits must be parked in government securities and bank deposits; they may issue ATM and debit cards and offer net banking and bill payments.
- They advance concept financial inclusion by reaching migrants, small businesses and low-income households with cheap payments and remittance.
- Distinct from Small Finance Banks, which can both lend and take deposits and focus on small borrowers and priority sectors.
The defining limits (small deposits, no lending, no credit cards, deposit cap) and the Nachiket Mor Committee link are standard differentiated-banking facts.
Payment banks (deposits and payments only, no lending) versus small finance banks (can lend and take deposits); a payment bank cannot give loans or issue credit cards.
RBI-licensed banks for small deposits and payments only; no lending, no credit cards, deposit cap 2 lakh rupees; from the Nachiket Mor Committee.