{"id":361550,"date":"2026-04-25T15:43:48","date_gmt":"2026-04-25T10:13:48","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=361550"},"modified":"2026-04-25T15:43:48","modified_gmt":"2026-04-25T10:13:48","slug":"payment-banks","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/payment-banks\/","title":{"rendered":"Payment Banks"},"content":{"rendered":"<p><b>News: <\/b><span style=\"font-weight: 400;\">The Reserve Bank of India (RBI) recently revoked the banking licence of Paytm Payments Bank Limited, bringing its operations as a bank to an end from April 24.\u00a0<\/span><\/p>\n<h2>About Payment Banks<\/h2>\n<figure style=\"width: 324px\" class=\"wp-caption aligncenter\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" src=\"https:\/\/i0.wp.com\/www.newsonair.gov.in\/wp-content\/uploads\/2026\/04\/Screenshot-2026-04-25-074955-1.jpg?resize=324%2C216&#038;ssl=1\" alt=\" Payments Bank\" width=\"324\" height=\"216\" \/><figcaption class=\"wp-caption-text\">Source: AIR<\/figcaption><\/figure>\n<ul>\n<li><b>Formation: <\/b><span style=\"font-weight: 400;\">Payment Banks in India were <strong>established in 2014 based on the recommendations of the Nachiket Mor Committee.\u00a0<\/strong><\/span>\n<ul>\n<li><span style=\"font-weight: 400;\">It was set up to<strong> operate on a smaller scale with minimal credit risk.<\/strong><\/span><\/li>\n<\/ul>\n<\/li>\n<li><b>Objective: <\/b><span style=\"font-weight: 400;\">The main objective is<strong> to advance financial inclusion by offering banking and financial services to the unbanked and under-banked areas.<\/strong><\/span><\/li>\n<li><b>Legal Provisions:<\/b><span style=\"font-weight: 400;\">\u00a0The legal provisions governing the payment banking operations in India are mentioned below:<\/span>\n<ul>\n<li><span style=\"font-weight: 400;\">These banks have to register as a <\/span><b>Public Limited Company under the Companies Act 2013 <\/b><span style=\"font-weight: 400;\">and obtain a<\/span><b> licence as per the Banking Regulation Act 1949.\u00a0<\/b><\/li>\n<li><b>Regulated by:<\/b><span style=\"font-weight: 400;\"> They are also regulated by the <\/span><b>RBI Act 1934, Foreign Exchange Management Act 1999 and Payment and Settlement Systems Act, 2007.<\/b><\/li>\n<li><span style=\"font-weight: 400;\">The<\/span><b> minimum capital requirement <\/b><span style=\"font-weight: 400;\">is<\/span><b> 100 crores.\u00a0<\/b><\/li>\n<\/ul>\n<\/li>\n<li><b>Features:<\/b>\n<ul>\n<li><b>Type of Accounts: <\/b><span style=\"font-weight: 400;\">The payment bank <\/span><b>can open only Savings Bank Accounts and Current Accounts.<\/b><\/li>\n<li><span style=\"font-weight: 400;\">The <\/span><b>maximum balance of deposit <\/b><span style=\"font-weight: 400;\">they can have in their account is only <\/span><b>Rs. 2,00,000<\/b> <span style=\"font-weight: 400;\">(<\/span><span style=\"font-weight: 400;\"><strong>Earlier<\/strong> it was only <strong>Rs. 1,00,000<\/strong>).<\/span><\/li>\n<li><span style=\"font-weight: 400;\">However, these<\/span><b> cannot accept deposits from Non-resident Indians.<\/b><\/li>\n<li><b>Lack of lending power:\u00a0<\/b><span style=\"font-weight: 400;\">These are <strong>not allowed to lend<\/strong> money or provide lending services.<\/span>\n<ul>\n<li><span style=\"font-weight: 400;\">They are allowed to issue ATM or Debit cards, but are not allowed to issue credit cards.<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b>CRR Requirement: <\/b><span style=\"font-weight: 400;\">Payment banks have to deposit the <strong>Cash Reserve Ratio (CRR)<\/strong> with the RBI, just <strong>like other<\/strong> commercial banks.<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b>Payment Banks operating in India:<\/b><span style=\"font-weight: 400;\"> Now, <strong>only 5 such banks<\/strong> are operating in the country- <\/span>Airtel Payments Bank Limited, <a href=\"https:\/\/forumias.com\/blog\/india-post-payments-bank-ippb\/\">India Post Payments Bank Limited<\/a>, Fino Payments Bank Limited, NSDL Payments Bank Limited and Jio Payments Bank Limited.<\/li>\n<li><b>Reasons behind the cancellation of the license of PayTm payment bank:\u00a0<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">The Reserve Bank of India (RBI) has<\/span><b> cancelled the banking licence <\/b>issued to Paytm Payments Bank Limited<b> under Section 22(4) of the Banking Regulation Act, 1949 (\u2018BR Act\u2019)<\/b><span style=\"font-weight: 400;\">, effective from the close of business on April 24, 2026.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Paytm Payments Bank is<\/span><b> now prohibited from conducting the business of \u2018banking\u2019 as defined in Section 5(b) or any additional business <\/b><span style=\"font-weight: 400;\">specified unde<\/span><b>r Section 6 of the BR Act, 1949<\/b><span style=\"font-weight: 400;\"> with immediate effect.<\/span><\/li>\n<li><b>Section 22 (3) (b) of the BR Act:<\/b><span style=\"font-weight: 400;\"> In its order, the <strong>RBI stated that the bank\u2019s operations were conducted in a manner detrimental<\/strong> to both its own interests and those of its depositors, resulting in <strong>non-compliance with Section 22 (3) (b) of the BR Act.<\/strong><\/span><\/li>\n<li><b>Section 22 (3) (c) of the BR Act: <\/b><span style=\"font-weight: 400;\">The <strong>overall conduct of the bank\u2019s management was found to be against the interests of depositors<\/strong> <strong>and the public,<\/strong> leading to a<strong> violation of Section 22 (3) (c) of the BR Act.<\/strong><\/span><\/li>\n<li><b>Section 22 (3) (e) of the BR Act:<\/b><span style=\"font-weight: 400;\"> As per Section 22 (3) (e) of the BR Act, permitting the bank to continue its operations would <strong>not serve any meaningful purpose or public interest.<\/strong><\/span><\/li>\n<li><b>Section 22 (3) (g) of the BR Act:<\/b><span style=\"font-weight: 400;\"> The bank failed to <strong>satisfy the conditions specified under its Payments Bank licence, thereby breaching Section 22 (3) (g) of the BR Act.<\/strong><\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>News: The Reserve Bank of India (RBI) recently revoked the banking licence of Paytm Payments Bank Limited, bringing its operations as a bank to an end from April 24.\u00a0 About Payment Banks Formation: Payment Banks in India were established in 2014 based on the recommendations of the Nachiket Mor Committee.\u00a0 It was set up to&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/payment-banks\/\">Continue reading <span class=\"screen-reader-text\">Payment Banks<\/span><\/a><\/p>\n","protected":false},"author":10366,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1566,3127,12039],"tags":[11872,10500],"class_list":["post-361550","post","type-post","status-publish","format-standard","hentry","category-daily-factly-articles","category-economy","category-knolls","tag-9pm-daily-factly","tag-indian-express","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/361550","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10366"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=361550"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/361550\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=361550"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=361550"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=361550"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}