The licensing norms clearly say that the payments banks can collect deposits of up to Rs.1 lakh, provide payments and remittance services and distribute third-party financial products. Promoting a non-cash economy by setting up payments banks is a great idea but the current system does not incentivise cashless transactions. For others, payments services requirement may not be that frequent which could justify the business model of close to a dozen specialized banks. Rajan feels that the payments bank would work well for those who already have a base of operations and many contact points. This means, if a payments bank accepts higher deposits, excess money would have to be transferred during the day.

Source: Mint June 12, 2016 19:52 UTC