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Payments Bank knock on RBI’s door for extending small loans
May 18, 2023
With the payments bank model not evolving as anticipated, industry participants have knocked on the Reserve Bank of India’s door for a relook at the regulations, reported Business Line.
Industry participants point out that unlike the other categories of banking channels such as small finance banks and universal banks, which have seen significant changes to their respective licensing guidelines from the time that they were brought into force, the payments banks space has not had much progress in terms of their operational framework.
“Since the time these banks were conceptualised, licensed and became operational, much has changed in the payments industry. But the laws governing payments banks have almost remained the same,” said a senior executive of a payments bank who didn’t want to be named.
Stating that it is no longer a question of existence but opportunities for scalability, sources said payments banks have approached the RBI to allow them to operate in the smallticket retail loans space.
“Ultimately, if we have to build a balancesheet, we need to focus on building assets and that cannot be done in the current framework,” said the CEO of a payments bank.
“This is becoming a limitation to build a deposit book because unless there are deployment avenues, raisin them (deposits) is only an additional cost for us, not a revenue stream,” he added.
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