PAYMENTS BANKS Vs. SMALL PSBs

Public Sector Banks are again in the news.  How?  A Reserve Bank of India report reads that the volume of point-of-sales based transactions (POS) done by various debit card users of three payment banks viz Airtel Payments Bank, Fino Payments Bank, and Paytm Payments Bank are more than the those of Small Sized Public Sector Banks.  Further statistics reads:

2. The combined debit card transactions of these three payments Bank in August 2018 was reported to be 2.15 million.
3. The individual tallies of PSU Banks during this period was reported to be
   • Vijaya Bank :   09 million
   • United Bank of India : 77 million
   • Dena Bank :   73 million
4. The monthly volume of Debit Card POS transactions of Paytm Payments Bank has already shown a great momentum against the smallest PSU Banks, in less than a year’s period of commencing its operations.
5. It is also worth noting that in July this year Reserve Bank of India had advised the two Payments Banks to stop enrolling new customers for the reason:
   • Paytm Payments Bank had received some adverse observations from Central Bank on the customer on-boarding process.
   • FINO Payments Bank was observed to be having accounts with more than Rs.1 lac balance which was against the stipulations of RBI.
6. Out of the three payments bank referred above, though Paytm Payments Bank was the last one to be launched, it has surpassed the other two and mustered more accounts, since it could get the larger number of transacting customer from the migration of its existing wallet users.

General:

• Payment banks are not allowed to lend money
• They are expected to capitalize on other resources of revenue which mainly is through customer transactions.
• The thin margin in the revenue has already forced the other takers like Tech Mahindra, Cholamandalam Investments and Finance and Dilip Sanghvi surrender their in principle licenses for launching a Payments Bank.
• Aditya Birla Idea Payments Bank and Jio Payments Bank are yet to launch full-service consumer operations.
• The Payments Bank promoted by National Securities Depository (NSDL) is yet to be launched.