The future is “uncertain” fo payments banks and the model aimed at deepening financial inclusion requires regulatory support in order to b effective, a report said Monday. The report from economists at SBI comes days after Aditya Birla Payments Bank, of the handpicked licensees, reportedly decided to shut down from October 2019. Vodafone m-Pesa had also shut shop earlier this month.
“The future is uncertain, but in time business will expand and evolve, with the help of regulatory and Government support,” they said in the note. The payments bank model “seems to have failed to achieve the stated objectives” with only four entities becoming operational out of the 11 players licensed in 2014 it said.
The report said the payments banks face stringent regulations both on the asset and the liabilities side. They are not allowed to lend, deposit acceptance i capped at Rs 1 lakh and the capital requirement is at a steep 15 per cent despite the business being free from credit risks. The higher disclosure norms that oblige them to share their business plan with the regulator could prove to b “somewhat tricky” when the business model of the technology-intensive companies itself could be the biggest source o their competitive strength, it said.Read More..
