Payments banks will add competition & force others to be cheaper: Dhirendra Kumar, Value Research
August 24, 2015: Reserve Bank of India has given permission to 11 entities to start Payments Banks. On 19th August, RBI Governor had announced the list of 11 entities that has got the license to be a payment bank in the country. There were 42 applicants that had applied for the banking license. Reliance, Bharti Airtel, Paytm, Vodafone are also among those11 applicants that have got approval from RBI.
These 11 payment banks will differ from other banks as they will provide only the basic facilities of banking. The license is valid for 18 months. These banks can open a saving account up to a limit of 1 lakh rupees. RBI has included the mobile companies, online payment giants in the list. This move of RNI will surely increase the competition in the market and will boost the retail banking.
The Banking Sector is experiencing a boom. Private Sector Banks are gaining points as compared to public entities. Initiating payment banks in the country will add a new definition of competition, and the banking services may get cheaper and better.
We can expect that this increased competition will force banks to charge lower fees and fines from the customers. The results of initiating Payment Banks can be expected to be in a positive direction.