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With reference to Payment Banks, consider the following statements:
They are first proposed by the Nachiket Mor committee.
  • Payments Banks are not bound by the reserve requirement rules of RBI.
  • Payments banks are not permitted to handle cross border remittance transactions.
    Which of the statements given above is/are correct?
    • a)
      1 only
    • b)
      2 and 3 only
    • c)
      1 and 3 only
    • d)
      1, 2 and 3
    Correct answer is option 'A'. Can you explain this answer?
    Most Upvoted Answer
    With reference to Payment Banks, consider the following statements: ...
    • A payments bank is like any other bank, but operating on a smaller scale without involving any credit risk. In simple words, it can carry out most banking operations but can‘t advance loans or issue credit cards.
    • The proposal for creating payments banks stemmed from the report of the Committee on Comprehensive Financial Services for Small Businesses and Low Income Households (Chairman:
    • Dr. Nachiket Mor) submitted in 2014. Hence, statement 1 is correct.
    • The minimum paid-up equity capital for payments banks shall be Rs. 100 crore, of which the promoter‘s contribution would be minimum 40 percent of paid-up equity capital for the first 5 years of commencement of the business.
    • Payments Banks are licensed by the Reserve Bank of India to further financial inclusion by enabling them to provide:
      • small savings/ current accounts below Rs. 1 lakh
      • distribution of mutual funds, insurance products on a non-risk sharing basis and
      • payments / remittance services to migrant labour workforce, low income households, small businesses, other unorganised sector entities and other users through high volume-low value transactions in deposits and payments / remittance services using a secured technology-driven environment. Hence, statement 3 is not correct.
    • The Payments Bank cannot set up subsidiaries to undertake non-banking financial services activities. Since liquidity is the most important aspect required for such banks they will be bound by the reserve requirement rules of RBI (CRR, SLR etc.). Hence, statement 2 is not correct. Thus, apart from amounts maintained as Cash Reserve Ratio (CRR) with the Reserve Bank on its outside demand and time liabilities, the payments banks will be required to invest a minimum 75 per cent of its "demand deposit balances" in Statutory Liquidity Ratio (SLR) eligible Government securities/treasury bills with maturity up to one year and hold maximum 25 per cent in current and time/fixed deposits with other scheduled commercial banks for operational purposes and liquidity management.
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    Community Answer
    With reference to Payment Banks, consider the following statements: ...
    Payment Banks:

    - Payment Banks were first proposed by the Nachiket Mor committee.
    - These banks are licensed under Section 22 of the Banking Regulation Act, 1949.
    - They are different from regular banks as they can only accept deposits up to Rs. 1 lakh per customer.
    - They cannot carry out lending activities.
    - They are also not bound by the reserve requirement rules of RBI.

    Statements:

    - Statement 1: Correct. The Nachiket Mor committee proposed the idea of Payment Banks to increase financial inclusion in the country.
    - Statement 2: Incorrect. Payment Banks are also required to maintain a cash reserve ratio (CRR) and a statutory liquidity ratio (SLR) like regular banks.
    - Statement 3: Incorrect. Payment Banks are allowed to handle cross-border remittance transactions, subject to the regulations of the RBI.

    Answer:

    Therefore, the correct answer is option 'A' - 1 only.
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    With reference to Payment Banks, consider the following statements: They are first proposed by the Nachiket Mor committee. Payments Banks are not bound by the reserve requirement rules of RBI. Payments banks are not permitted to handle cross border remittance transactions. Which of the statements given above is/are correct?a)1 onlyb)2 and 3 onlyc)1 and 3 onlyd)1, 2 and 3Correct answer is option 'A'. Can you explain this answer?
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    With reference to Payment Banks, consider the following statements: They are first proposed by the Nachiket Mor committee. Payments Banks are not bound by the reserve requirement rules of RBI. Payments banks are not permitted to handle cross border remittance transactions. Which of the statements given above is/are correct?a)1 onlyb)2 and 3 onlyc)1 and 3 onlyd)1, 2 and 3Correct answer is option 'A'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about With reference to Payment Banks, consider the following statements: They are first proposed by the Nachiket Mor committee. Payments Banks are not bound by the reserve requirement rules of RBI. Payments banks are not permitted to handle cross border remittance transactions. Which of the statements given above is/are correct?a)1 onlyb)2 and 3 onlyc)1 and 3 onlyd)1, 2 and 3Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for With reference to Payment Banks, consider the following statements: They are first proposed by the Nachiket Mor committee. Payments Banks are not bound by the reserve requirement rules of RBI. Payments banks are not permitted to handle cross border remittance transactions. Which of the statements given above is/are correct?a)1 onlyb)2 and 3 onlyc)1 and 3 onlyd)1, 2 and 3Correct answer is option 'A'. Can you explain this answer?.
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