In a bid to push the digital payments banks in the country, the Reserve Bank of India (RBI) on Wednesday announced to double the maximum balance limit at end of the day from Rs 1 lakh to Rs 2 lakh per individual customers of payments banks. Payments banks have been demanding a hike in deposit limit for a long time. The limit has been enhanced with immediate effect.
"The extant 'Guidelines for Licensing of Payments Banks' issued on November 27, 2014 allow payments banks to hold a maximum balance of Rs 1 lakh per individual customer. Based on a review of performance of payments banks and with a view to encourage their efforts for financial inclusion and to expand their ability to cater to the needs of their customers, including MSMEs, small traders and merchants, it has been decided to enhance the limit of maximum balance at end of the day from Rs 1 lakh to Rs 2 lakh per individual customer," the RBI said in a statement.
RBI Governor Shaktikanta Das said that the decision will boost furthering financial inclusion. It will also expand the ability of payments banks to cater to the growing needs of customers.
Payments banks were introduced by the RBI to enhance financial inclusion. The objective is to provide small savings accounts, payments and remittance services to low income groups and small businesses.
Payments banks are just like any other bank, but operate on a smaller scale. These banks cannot issue loans and credit cards. Both current account and savings accounts can be operated by such banks. These banks can accept a restricted deposit, which the RBI has hiked to Rs 2 lakh.
Back in August 2015, the central bank had given in-principle nod to 11 entities to start payments bank. Airtel Payments Bank was the first one to launch payments bank. India Post Payments Bank (IPPB) had started operations in 2017. Some other popular payments bank are Paytm Payments Bank and Fino Payments Bank.