Differentiated and Payment Banks
- This system of banks is different from universal banks as they are mandated to serve niche interests and can offer limited products.
- Payment banks and small banks are part of differentiated banking.
- The purpose of these banks is to promote financial inclusion.
- Nachiket Mor committee in 2014 recommended the establishment of such institutions.
- Objective of payments banks is to increase financial inclusion by providing small savings accounts, payment/remittance services to migrant labor, low income households, small businesses, other unorganized sector entities and other users.
- Those who can promote payments banks can be a commercial bank, non-bank PPIs (Prepaid payment issuer), Non Banking Financial Companies, mobile telephone companies, super market chains, real sector cooperatives companies and public sector entities.
- Payments Banks can accept demand deposits (only current account and savings accounts).
- No credit lending is allowed for Payments Banks.