InvestorQ : What is the difference between payment banks and small banks?
Shreya Mashelkar made post

What is the difference between payment banks and small banks?

Answer
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Nishita Gala answered.
1 year ago


Payment banks are promoted by business correspondents, supermarket chains, corporates, PSUs, prepaid card issuers, telecom companies, NBFCs, etc.

Small banks are promoted by individuals or professionals having 10 years of experience in finance, NBFCs, microfinance companies and local area banks.

Payment banks are required to have a minimum capital of Rs 100 crore. They need to maintain 75 percent of deposits in government bonds and remaining 25 percent of deposits in other banks. Payment banks must have atleast 26 percent investment by Indian promoters. It needs to get listed on the exchanges if networth of the payment bank surpasses Rs 500 crore. They need to have 25 percent of branches in areas where banking facilities are not available. The bank should also maintain a limit on money deposited in one account upto Rs 1 lakh.

Like payment banks, small banks also need to maintain a minimum capital of Rs 100 crore. Small banks need to extend or disburse 75 percent of loans to priority sectors. Small banks need to have a business correspondent network along with maintaining reserve requirements.

Differentiated Banks: Payment Banks vs Small Finance Banks Image courtesy: Times of India