RBI sets minimum capital requirement for payment banks at 15%

RBI sets minimum capital requirement for payment banks at 15%

The Reserve Bank of India (RBI) on Thursday issued operating guidelines for payment banks (PB). 

PBs can accept only savings and current deposits, RBI said. "The aggregate limit per customer shall not exceed Rs 100,000, as provided in the Licensing Guidelines. However, the RBI will have no objection to the PBs making arrangements with any other scheduled commercial bank / SFB, for amounts in excess of the prescribed limits, to be swept into an account opened for the customer at that bank. This arrangement should be activated with the prior written consent of the customer."

RBI said that a payment bank must adhere to a minimum capital requirment of 15%, minimum Tier 1 and Tier 2 capital of 7.5%, each. It further set a large exposure limit of 5% to a scheduled commercial bank. The bank said, "PBs will not be permitted to undertake any para-banking activity except those allowed as per the Licensing Guidelines and the related FAQs issued."

RBI said, "PBs will be permitted to participate in the call money and CBLO market as both borrowers and lenders. These borrowings would, however, be subject to the limit on call money borrowings as applicable to scheduled commercial banks."

KEY GUIDELINES: 

• Payment banks must maintain minimum investment to the extent of not less than 75 per cent of ‘demand deposit balances’ - DDB (including the earnest money deposits of BCs) as on three working days prior to that day, in Government securities/Treasury Bills with maturity up to one year that are recognized by RBI as eligible securities for maintenance of Statutory Liquidity Ratio (SLR).

• Further, PBs shall, on any given day, maintain balances in demand and time deposits with other scheduled commercial banks, which shall not be more than 25 per cent of its DDB (including the earnest money deposits of BCs) as on three working days prior to that day.

• The investments and deposits made according to (i) and (ii) above, together shall not be less than 100 per cent of the DDB (including the earnest money deposits of BCs) of the PB unless it is less to the extent of balances kept with RBI. Note: Balances with other scheduled commercial banks in excess of 25 per cent of DDB (including the earnest money deposits of BCs), is permissible to the extent the excess amount is sourced from funds other than DDB (including the earnest money deposits of BCs).

• PBs will not be allowed to classify any investment, other than those made out of their own funds, as HTM category. The investments made out of their own funds shall not, in any case be, in assets or investments in respect of which the promoter / a promoter group entity is a direct or indirect obligor.

• PBs will not be allowed to participate in ‘when issued’ and ‘short sale’ transactions.

• PBs will be permitted to invest in bank CDs within the limit applicable to bank deposits.