Reserve Bank of India(RBI) places additional curbs on Paytm Payments Bank(PPB) | Current Affairs | Vision IAS
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    Reserve Bank of India(RBI) places additional curbs on Paytm Payments Bank(PPB)

    Posted 01 Feb 2024

    Updated 16 Mar 2024

    2 min read

    • PPB will not take fresh deposits in any customer accounts, prepaid instruments, wallets, FASTags etc., after February 29, 2024.
    • RBI exercised its powers under section 35A of the Banking Regulation Act of 1949.
      • RBI has taken action due to persistent non-compliance observed by external auditors and material supervisory concerns in the PPB.
      • RBI has broad powers to issue direction in the public interest or in the interest of banking policy under the act.

     

    • Payment banks: The Nachiket Mor committee suggested the introduction of specialised banks or ‘payments banks’ with the objective of financial inclusion.
      • They have to register as a Public Limited Company and obtain a license as per the Banking Regulation Act 1949.
      • They can carry out most banking operations but can’t advance loans or issue credit cards.
      • They can take deposits up to 2 lakh, issue debit cards, and provide mobile and internet banking facilities.

     

    • Challenges with payment banks
      • Lack of avenues for earning of revenue since they cannot lend
      • The need for a digital presence demands high investment in digital infrastructure
      • Competition from traditional banks offering mobile banking services, unified payments interface, etc.
    • Tags :
    • RBI
    • Payment Bank
    • Paytm Payment Bank
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