RBI favours differentiated banks, one for low-income households

MUMBAI: A panel set up by the RBI has called for establishing differentiated lenders, including one for small businesses and low-income households.

The bank for small businesses, called the 'payments banks', will focus on providing primary services to the people, the panel on financial inclusion said in its report released today.

"Given that their primary role is to provide payment services and deposit products to small businesses and low- income households, they will be restricted to holding a maximum balance of Rs 50,000 per customer," the report by the Committee on Comprehensive Financial Services for Small Businesses and Low Income Households said.

The multi-member panel is led by ex-ICICI Bank Executive Director Nachiket Mor.

It said payments banks shall have a minimum capital requirement of Rs 50 crore and maintained that existing lenders should be allowed to have payments banks as a subsidiary.

The panel suggested a slew of dedicated banks to be formed, including the 'wholesale banks' which will lend big amounts but should not raise over Rs 5 crore from a single depositor.

The report suggested a bank dedicated to funding infrastructure projects. This comes in the backdrop of projection that infrastructure sector would require an investment of USD 1 trillion during the 12th Plan (2012-17).

At present, the country has a universal banking system wherein lenders serve all the needs. However, there have been a lot of issues due to which the idea of differentiated banking has been gaining ground.

The RBI, in a paper on 'banking structure' released last August, also spoke of moving away from the universal banking approach.

Some analysts feel RBI may start the process of differentiated licensing with the current round of banking applications itself.