Your money is safe in banks. Yes, banks have always been associated with safety. No one can steal your money. Banks give you back the money you deposit, with interest. Now, there’s a new kind of bank. It’s called a payment bank. Payment bank….It’s a BIG WORD. What’s this payment bank? Is there something special about it?
It’s just like any normal bank, but much smaller in size. Size is not of the bank building. It’s the scale of operations. Yes, payment banks operate on a smaller scale than normal banks. While payment banks are small in size, they are not small in reach. Payment banks use the latest technologies to give a tough fight to banks. Payment banks might be short on staff, but banks better watch out. Payment banks have the power to give banks tough competition.
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The Reserve Bank of India, introduced payment banks way back in 2014. The aim of a payment bank….Promote financial inclusion in India, by including households who have low income, small businesses, migrant laborers and small account holders, in the organized financial sector. Payment banks use the power of technology, to reach out to new customers. They depend on mobile phones, rather than traditional bank branches.
India has more number of mobile subscribers than bank account holders. Using the power of the mobile, a payment bank can reach customers, across the length and breadth of the country.
A payment bank cannot offer the facility of loans and credit cards to customers. Simple….Payment banks do not lend.
Payment banks help promote financial inclusion in India. A number of our citizens, especially in rural areas still transact only in cash. Payment banks can help these citizens, go cashless, as they come into the formal banking and financial system. The Government scrapped 500 and 1000 rupee notes on November 8th 2016. With high value notes been scrapped, citizens in India especially in rural areas, can easily adopt cashless transactions using payment banks.
Many citizens in rural areas and villages, migrate to towns and cities in search of better job opportunity. These citizens have to send money to their families, back home. Payment banks offer the facility of money transfer through mobile phones. Migrant laborers can easily send money to their families in villages using payment banks.
The Government offers subsidies to the poor in our country, through direct benefit transfer or DBT. Subsidies are transferred directly to beneficiaries bank accounts. There is no chance of the money being diverted or not reaching the beneficiary. Citizens who get healthcare, education and gas subsidies have the money transferred, directly to their bank accounts through DBT.
Payment banks are very important for financial inclusion in India. Payment banks go, where traditional banks do not go. They can reach the furthest villages in India, through the power of the mobile phone. Soon, every citizen in India will have the power of the formal banking system, behind him. Payment banks will make our 125 crore citizens, a force to reckon with.
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