Pradhan Mantri Mudra Yojana (PMMY)
The Pradhan Mantri Mudra Yojana (PMMY) is a government initiative in India that aims to provide financial support to small and micro enterprises. The scheme was launched in 2015 and is operated by the Ministry of Finance.

Member Lending Institutions
The PMMY allows lending institutions to provide loans under three categories: Shishu, Kishore, and Tarun. These loans are provided to individuals, partnerships, and non-corporate small business units. The Member Lending Institutions for the PMMY include:

a) Scheduled Commercial Banks (SCBs)
b) Regional Rural Banks (RRBs)
c) Non-Banking Financial Companies (NBFCs)
d) Micro Finance Institutions (MFIs)
e) Payment Banks

Explanation
The correct answer is option 'E' - Payment Banks. Payment banks cannot be Member Lending Institutions for the Pradhan Mantri Mudra Yojana.

What are Payment Banks?
Payment banks are a new category of banks introduced by the Reserve Bank of India (RBI) in 2015. These banks are different from traditional banks in that they can only accept deposits and provide payment services. They cannot engage in lending activities like providing loans.

Reasons why Payment Banks cannot be Member Lending Institutions
1. Limited activities: Payment banks are primarily focused on payment services and are not authorized to engage in lending activities. As the Pradhan Mantri Mudra Yojana is specifically designed to provide loans to small and micro enterprises, it requires institutions that have the capability to lend money.

2. Regulatory restrictions: The RBI has imposed certain restrictions on the activities of payment banks to ensure their stability and compliance with regulations. These restrictions prevent payment banks from offering lending services, which makes them ineligible to be Member Lending Institutions for the PMMY.

3. Purpose mismatch: The objective of the PMMY is to provide financial support and credit to small businesses and entrepreneurs. Payment banks, being limited to deposit acceptance and payment services, do not align with this objective as they do not have the capacity to lend money.

In conclusion, payment banks cannot be Member Lending Institutions for the Pradhan Mantri Mudra Yojana due to their limited activities, regulatory restrictions, and purpose mismatch.