MUMBAI: The Reserve Bank of India (RBI) on Thursday said the entities that had been granted a payments bank (PB) licence would need to take specific approval for the products they would be offering to customers.
“At the time of submitting application for licence, the PBs should submit to RBI a list of financial products they intend to offer with a clear description,” the banking regulator said in the operational guidelines.
Banks do not need to take prior RBI approval to launch products but prepaid payment instruments issuers need to take such approval to offer payments products.
All new products proposed to be introduced thereafter should be intimated to RBI for information, it said. “If required, the RBI may place suitable restrictions on the design, functioning, or other features of the product including discontinuing the product,” RBI said.
Sinjhini Kumar, CEO-designate, Paytm Payments Bank, said the move is in the right direction since a lot of innovation will happen in the payments space.
“There is new ecosystem that is going to be created,” she said. “There will be innovations as well as investment. So it is better to take prior approval rather than rolling it back after offering to customers if the regulator is not convinced about the product,” Ms. Kumar told The Hindu .
RBI also said the annual plans for opening of physical access points by the PBs for the initial five years would need prior approval of the RBI. “The first such plan shall be submitted to RBI before commencement of business,” it said.
Payments banks are not allowed to lend. Their main mandate is to offer remittance services. They can also offer simple financial products like insurance and mutual funds.
The regulator also mandated that an employee of the PB should be available for sufficient duration, at a fixed location known to the customers at the district level, to attend to customer grievances and support agent supervision. This fixed location will be considered while assessing the requirement of opening at least 25 per cent physical access points in rural centres, RBI clarified.
In the operational guidelines on small finance banks, that were also released on Thursday, the RBI clarified such entities are required to have 25 per cent of their branches in un-banked rural centres within one year from the date of commencement of operations.
Both payments banks and small finance banks have been allowed electronic authentication and confirmation for opening accounts and wet signatures have not been made mandatory.
RBI had granted in-principle licences to 11 payments banks and 10 small finance banks last year. While three out of 11 PBs have dropped out, others will have to start operations within 18 months of receiving in-principle approval. One small finance bank has already started operation, while two others have received the final licence.
