Financial Inclusion is the main reason to introduce small bank and payment bank in Indian Banking Industry by RBI. By the help of Small banks and Payment banks, we can easily achieve complete financial inclusion and can help to all the citizens of India to contribute in the main stream of Indian Economy.

Here, we will discuss all about small and payment banks and what the main differences between small banks and payment bank.

Let’s try to understand Small Bank Vs Payment bank by the help of question and answers.

Payment Bank

What is the key objective to introduce Payment Bank?

The key objective of payment bank is to achieve financial inclusion by opening accounts to every citizen and providing basic banking facilities to lower income group even migrated workers.

Who can issue the license to open a Payment Bank?

Only RBI can issue the licenses to open Payment banks.

Who can open or operate the Payment Bank?

Any NBFC, BC , Individual, Joint Venture, Group and any other can operate the Payment Bank after fulfilling the all conditions/rules issued by RBI.

Can payment Bank issue ATM Debit cards and Credit cards?

Payment Bank cannot issue credit cards. It can issue ATM debit Card.

What is the minimum Paid-up capital for Payment bank decided by RBI?

100 Crore.

What is the period to full fill all the conditions of RBI and to set up a payment bank after getting approval to open a Payment bank?

18 Month

Can Payment bank perform any lending activity?

NO

What is the maximum balance to be in an individual’s account?

1 Lakh

Can any individual or group open FD account in payment bank?

NO

Small Bank:

What is the key objective to introduce Small Bank?

The Key objective of Small Bank is to perform lending activities among weaker section and get complete financial inclusion.

Who can issue the license for small bank?

RBI

Who can open or operate small Bank?

Individuals with 10 years of experience in Banking, NBFCs and Micro Finance Institutions.

Minimum Paid-Up capital for Small bank?

100 Crores

Time Period for Set up a Small Bank after getting approval?

18 Months

Can small Bank give loan?

Yes, Small bank can give loan to farmers, MSMEs and any individual etc.

Can small Bank accept deposit or not?

Yes, Small Bank can accept deposit.

Can small bank accept any type of deposit?

Yes, all type of deposit like Demand deposit and Term deposit

Main Points to be Remember:

  • Small bank can give loans & advances while Payment bank not.
  • 25% branches of Small bank must be in rural areas.
  • Small bank mainly for the growth of agriculture and Micro, Small and Medium industries.
  • Payment bank mainly for the growth of individual/weaker section and etc.
  • External Advisory Committee (set-up by the RBI) will examine all the applications and recommend the applicant.

At last, Try to remember all the important points and make revision time to time to get the 100% benefit. It may be possible to issue the license of Small and Payment bank this year by RBI. All the names of applicants are on RBI website at present. You can visit RBI website and note down some famous applicants, it may be asked in any coming exam or interview.

1 COMMENT

  1. What is the defination of rural area as per RBI? Small bank? Payment bank? & actual?.

    As per my thoughts rural means where basic needs r nill or insufficient.

    Payment & Small bank should open first in those area/village where banks in any form (excluding PATPEDHI) are not presence. If it will execute in appropriate way. Economi get big boost

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