UPSC General Studies Solved Paper - General Studies-2016

  • question_answer
    The establishment of 'Payment Banks' is being allowed in India to promote financial inclusion. Which of the following statement is/are correct in this context?
    1. Mobile telephone companies and supermarket chains that are owned and controlled by residents are eligible to be promoters of Payment Banks.
    2. Payment Banks can issue both credit cards and debit cards.
    3. Payment Banks cannot undertake lending activities.
    Select the correct answer using the codes given below

    A)  1 and 2           

    B)  1 and 3

    C)  Only 2 

    D)         1, 2 and 3

    Correct Answer: B

    Solution :

    Exp. [b] On 23rd September, 2013, Committee on Comprehensive Financial Services for Small Businesses and Low Income Households, headed by Nachiket Mor, was formed by the RBI. On 7th January, 2014, the Nachiket Mor, Committee submitted its final report. Among its various recommendations, it recommended the formation of a new category of bank called Payment Bank. On 17th July, 2014 the RBI released the draft guidelines for Payment Banks. seeking comments for interested entities and the general public. On 27th November, RBI released the final guidelines for payments banks. The key aspirants to payment banking business include telecom firms, prepaid payment instruments/ payment solution providers, retail chains, large business correspondents and business conglomerates. Out of them, Telecom firms have an advantage over others mainly because they already have a distribution network in rural areas. Most of the pre-paid payment instruments / payment solution providers are tech savvy and already working in the field of mobile payments. Scope of activities of Payment Banks Payments Banks can accept demand deposits. This implies that customers can open savings accounts as well as current accounts: but NO time deposits (such as FDs). ? An account balance cannot exceed Rs.1lakh for an individual customer. ? Payment Banks can issue ATM/ debit cards but not credit cards. ? Payment Banks cannot give loans. ? Payments and remittance services through various channels. ? A Payment Bank can become Banking Correspondent (BC) of another bank and offer all products / services which a BC can offer. ? Payment Banks can distribute non-risk sharing financial products like mutual fund units and insurance products, etc. ? The revenue of these banks would come mainly from the transaction fees.

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