Payments banks seek Rs 5 lakh deposit limit, push for lending nod: Report

Payments banks in India have urged the Union Finance Ministry to increase the deposit limit per account to Rs 5 lakh, up from the current cap of Rs 2 lakh, Business Standard reported, citing a source who attended a recent meeting chaired by Department of Financial Services Secretary M Nagaraju in New Delhi.

This marks the latest push by payments banks for regulatory changes, following the previous increase in April 2021, when the Reserve Bank of India (RBI) raised the maximum end-of-day balance from Rs 1 lakh to Rs 2 lakh.

Along with seeking a higher deposit ceiling, payments banks have also requested permission to lend to the microfinance sector, albeit with a cap on loan amounts. If approved, this would represent a significant shift in their operating framework, which currently mandates that payments banks invest exclusively in government securities.

“The meeting reviewed the financial status of payments banks, and the government sought a road map for financial inclusion,” a source told Business Standard. Discussions also covered licences for small finance banks (SFBs), which payments banks can apply for after five years of operation, provided they meet RBI’s regulatory requirements, including a minimum paid-up voting equity capital or net worth of Rs 200 crore. Fino Payments Bank applied for an SFB licence last year, the report added.