Payments Bank as A Tool for Financial Inclusion in India

Abstract

In 2013, the RBI formed a committee led by Dr. Nachiket Mor to investigate comprehensive banking facilities for small enterprises, less-earning people and migratory workers. The committee proposed introducing a Payments bank for low-earning individuals and small enterprises. Any other form of bank is a payments bank, operating modestly without exposing oneself to financial risk The majority of banking transactions can be handled by a payments bank. However, they are not able to make loans or issue credit cards. Payments banks' primary goal is to promote the accessibility of banking and payments services for migratory workers, less-earning people, and small businesses. The RBI's goal with payments banks is to increase financial inclusion and in order to enhance the use of financial services in the most distant places to bring every section of the economy into the mainstream financial system. The main goal of this work is to comprehend the concept and features of payments bank and to investigate the factors behind payments bank adoption and also to learn about the challenges for payments bank within our country. The secondary data used in the study was gathered from corporate websites, academic institutions, and governmental entities. The significant factor for payments bank adoption by the customers are zero balance account, convenience, attractive interest rates, security and privacy. Payments banks come across lots of challenges, including reliance on low ticket account balances for profitability, lack of awareness, customers' unwillingness to accept digital payments, the inability of cross-selling to contribute significantly to the bottom line, restrictions on the use of funds, payments banks are prohibited from making loans, and intense rivalry between several payments banks, commercial banks and other financial institutions.