Banking institutions licensed by the RBI to provide specific banking services and products. A differentiated license will allow a bank to offer products only in select areas.
| Differentiated Banks in India | ||
| Criteria | Payment Banks | Small Finance Banks |
| Registration and Licensing | Registered under Companies Act, 2013 Licensed under Banking Regulation Act, 1949 | Registered under Companies Act, 2013 Licensed under Banking Regulation Act, 1949 |
| Eligibility | Pre-paid Payment Instrument (PPI) Providers, Resident individuals; NBFCs; Telecom Companies, super-market chains, public sector entities etc. | Resident Indians, Private Companies, Societies, NBFCs, MFIs, Local Area Banks |
| Min. Capital Requirements | Rs 100 crores | Rs 100 crores. (To be increased to Rs 200 crores within 5 years) |
| FDI allowed? | Yes. Up to 74% | Yes. Up to 74% |
| Accept Deposits | Only Demand Deposits. No Fixed Deposits and NRI Deposits | Yes. |
| Restrictions on Deposits | Up to Rs 2 Lakhs | No Restrictions |
| Deposit Insurance Available? | Yes | Yes |
| Can Lend Loans | No | Yes. At least 50 per cent of its loan portfolio should constitute loans and advances of up to Rs 25 lakh |
| Issue Debit/ Credit Card | Only Debit Card. No Credit Card | Both can be issued |
| Set up based upon recommendations of | Nachiket Mor Committee | Nachiket Mor Committee |
| Committee to evaluate applications for License | Nachiket Mor Committee | Usha Thorat Committee |
| SLR and CRR applicable | CRR Applicable; SLR: 75% of Deposits. | CRR and SLR Applicable |
| BASEL Norms applicable | Yes. 15% of RWAs | Yes. 15% of RWAs |
| PSL Norms applicable | No. Can’t lend Loans | Yes. Target: 75%. |
| Examples | Airtel, India Posts Payment Bank, Paytm, FINO etc. | Ujjivan, Utkarsh, Jana, Au etc. |
On-tap licensing of Small Finance Banks (SFBs)
- An ‘on-tap’ facility would mean the RBI would accept applications and grant license for Small Finance Banks (SFBs) throughout the year. The policy allows aspirants to apply for small finance bank license at any time, subject to the fulfilment of the conditions laid down by the RBI.
India Post Payments Bank (IPPB)
- Public sector company under the department of posts, Ministry of communication with 100% equity of the government of India and regulated by the Reserve Bank of India (RBI). Instead of Debit cards, IPPB issues Quick Response (QR) cards.
- It provides a unique, secure and convenient way to access one’s account without the need to remember PIN/Password.
- A transaction can be initiated by scanning the QR code followed by OTP authentication and verification by an OVD (Officially Valid Document).
Wholesale Banks
- Nachiket Mor committee had recommended setting up of Wholesale banks in India. Based upon these recommendations, the RBI had proposed setting up of Wholesale and Long term (WLTF) Banks in 2017.
- Proposals:
- Would accept only Current and Term Deposits of more than Rs 10 crores.
- Minimum Paid-up Capital: Rs 1000 crores.
- Cater to the funding needs of certain sectors of the economy with long gestation period such as infrastructure and core industries.