‘The establishment of ‘Payment Banks’ is being allowed in India to promote financial inclusion. Which of the following statements is/are correct in this context?

1. Mobile telephone companies and supermarket chains that are owned and controlled by residents are eligible to be promoters of Payment Banks.
2. Payment Banks can issue both credit cards and debit cards.
3. Payment Banks cannot undertake lending activities.

Select the correct answer using the code given below

[UPSC Civil Services Exam – 2016 Prelims]

(a) 1 and 2 only

(b) 1 and 3 only

(c) 2 only

(d) 1, 2 and 3

Answer: (b)        

Explanation:

• Eligible to be promoters of Payment Banks:
  • Existing non-bank Prepaid Payments Instrument (PPI) issuers,
  • NBFCs Corporate Business Correspondents,
  • Mobile phone companies, supermarket chains, public sector entities, real sector cooperatives, etc. Hence statement 1 is correct.
• Payment Banks can Accept demand deposits.
• Payment Banks can Issue ATM/Debit cards, but can’t issue credit cards. Hence statement 2 is incorrect.
• As per RBI guidelines, Payment Banks cannot undertake lending activities. Hence statement 3 is correct.