P-Banks to play feeder role, Rajan

Makes clear they can't graduate to universal banks

P-Banks to play feeder role, Rajan

Clearing the air over the role of the recently announced payment banks, RBI governor Raghuram Rajan said that they will only act as feeders and not as a threat to universal banks.

“Universal banks can do anything while payment banks cannot do some of the things that universal banks can do. In that sense, payment banks will be new feeders to the system to have existing businesses that can reduce costs,” Rajan said.

I do not see that much of a threat to the universal banks from the payment banks, Rajan added.

The Reserve Bank had, on Wednesday, given in-principle nod to 11 applicants including Aditya Birla Nuvo, Airtel M Commerce Services, and the Department of Posts to launch payment banks.

Small bank licences soon

Rajan also said that the central bank is looking at announcing small bank licences soon.

“Next month, we hope to announce the small bank licences. There will probably be a migration from small finance banks to universal banks but I do not see that path from payment banks to universal banks,” Rajan said.

When asked about the possibility of a rate cut in the September policy or before the policy, Rajan said he would like to stick to what he said in the policy statement.

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