RBI allows small finance banks and payments banks to conduct govt business
Mumbai/IBNS: Reserve Bank of India (RBI) has allowed scheduled payments banks and small finance banks (SFBs) to conduct government business.
"It has now been decided in consultation with the Department of Financial Services, Ministry of Finance, Government of India, to make scheduled payments banks and scheduled small finance banks eligible to conduct Government agency business," the RBI said in a notification on Wednesday
"Any payment bank or small finance bank that intends to undertake Government agency business may be appointed as an agent of RBI upon execution of an agreement with RBI, provided that the overarching regulatory framework prescribed for these banks is complied with," the RBI said.
On December 9, Paytm Payments Bank Limited said it had been included in the Second Schedule to the Reserve Bank of India Act, 1934.
Following its inclusion, Paytm Payments Bank can now explore new business opportunities, the company said in a press release.
"The Bank can participate in government and other large corporations issued Request for Proposals (RFP), primary auctions, fixed-rate and variable rate repos, and reverse repos, along with participation in Marginal Standing Facility," it said.
Also, the bank would now also be eligible to partner in government-run financial inclusion schemes, the release said.
According to RBI Act, 1934, a bank satisfying RBI that its affairs are not conducted in a manner detrimental to its depositors are included in the second schedule.
In January 2017, Paytm received the RBI nod to launch its payments bank. According to the company statement, as of March 31, 2021, the payments bank had over 6.4 crore savings accounts, and over Rs 5,200 crore deposits, including savings accounts, current accounts, fixed deposits with partner banks, and balance in wallets.