Question map
Not attempted Correct Incorrect ★ Bookmarked
Loading…
Q4 (IAS/2016) Economy › Economy Current Affairs › Digital payments ecosystem Official Key

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.

Result
Your answer: —  ·  Correct: B
Explanation

The correct answer is option B (statements 1 and 3 only).

Statement 1 is correct as mobile telephone companies and supermarket chains that are owned and controlled by residents are eligible to be promoters of Payment Banks[2].

Statement 2 is incorrect. Payment Banks cannot issue credit cards but can issue debit cards[4]. They can issue ATM/Debit Cards for payments and remittance services[1].

Statement 3 is correct. Payment Banks cannot give depositor's money as loans[4], meaning they are not allowed to lend[5]. This restriction ensures they focus on their primary objective of providing low-cost payment and remittance services to promote financial inclusion among migrant laborers, self-employed individuals, and low-income households.

Therefore, only statements 1 and 3 are correct, making option B the right answer.

Sources
  1. [1] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Payments Banks > p. 190
  2. [2] https://ijirt.org/publishedpaper/IJIRT168218_PAPER.pdf
  3. [3] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Payments Banks > p. 191
  4. [4] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Payments Banks > p. 191
  5. [5] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 21. Payment Banks: > p. 87
How others answered
Each bar shows the % of students who chose that option. Green bar = correct answer, blue outline = your choice.
Community Performance
Out of everyone who attempted this question.
50%
got it right
PROVENANCE & STUDY PATTERN
Full view
Don’t just practise – reverse-engineer the question. This panel shows where this PYQ came from (books / web), how the examiner broke it into hidden statements, and which nearby micro-concepts you were supposed to learn from it. Treat it like an autopsy of the question: what might have triggered it, which exact lines in the book matter, and what linked ideas you should carry forward to future questions.
Q. The establishment of 'Payment Banks' is being allowed in India to promote financial inclusion. Which of the following statements is/are c…
At a glance
Origin: Books + Current Affairs Fairness: High fairness Books / CA: 8/10 · 2/10

This question defines the 'New Banking Structure' era (2014-2016). While it was Current Affairs then, it is now core Static Economy. The key to cracking such questions is focusing on the 'Negative List'—what a new entity is explicitly FORBIDDEN from doing (e.g., lending, credit cards).

How this question is built

This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.

Statement 1
Are mobile telephone companies owned and controlled by residents eligible to be promoters of Payment Banks in India under RBI guidelines?
Origin: Direct from books Fairness: Straightforward Book-answerable
From standard books
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Payments Banks > p. 190
Presence: 5/5
“The guidelines for Payments Banks provide the following: • Eligible promoters can be non-bank Prepaid Payment Instrument (PPI) issuers and (i)other entities like mobile telephone companies, etc.• Shall primarily accept demand deposits up to maximum balance of \bar {\tau}1,00,000 per (ii)individual customer.• Can issue ATM/Debit Cards, payments and remittance services. (iii)• (iv) Maintain CRR with the RBI on its outside Demand and Time Liabilities and invest at least 75 per cent of its 'demand deposit balances' in SLR eligible G-Secs/Treasury Bills Examples of Payments Bank include India Post Payments Bank, Airtel Payments Bank, Paytm Payments Bank.”
Why this source?
  • The Payments Bank guidelines explicitly list 'other entities like mobile telephone companies' as eligible promoters.
  • The snippet names examples of Payments Banks (Airtel Payments Bank, Paytm Payments Bank), showing real-world application of mobile telecoms as promoters.
Statement 2
Are supermarket chains owned and controlled by residents eligible to be promoters of Payment Banks in India under RBI guidelines?
Origin: Web / Current Affairs Fairness: CA heavy Web-answerable

Web source
Presence: 5/5
"Corporate Business Correspondents (CBCs), mobile telephone companies, supermarket chains, companies, real sector cooperatives; and Public sector entities that are owned and controlled by residents may apply to set up payments banks."
Why this source?
  • Explicitly lists supermarket chains among entities that 'may apply to set up payments banks'.
  • Directly ties supermarket chains to eligibility for payment bank promotion/application.
Web source
Presence: 4/5
"3. Entities / groups in the private sector that are ‘owned and controlled by residents’ [as defined in FEMA Regulations,"
Why this source?
  • RBI guidelines list 'Entities / groups in the private sector that are ‘owned and controlled by residents’' as eligible promoters.
  • This wording establishes a resident ownership/control requirement for eligible private-sector promoter entities.
Web source
Presence: 5/5
"NBFCs, Corporate Business Correspondents, mobile telephone companies, and supermarket chains were allowed to apply for licences."
Why this source?
  • Notes that supermarket chains were allowed to apply for payment bank licences.
  • Supports that supermarket chains are among categories eligible under the payment bank scheme.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 8: Financial Market > 2016| > p. 250
Strength: 4/5
“• 24. The establishment of 'Payments 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 Payments Banks. • 2. Payments Banks can issue both credit cards and debit cards. • 3. Payments banks cannot undertake lending activities. Select the correct answer using the code given below: • (b) 1 and 3 only • (a) 1 and 2 only • (d) 1, 2 and 3 • (c) 2 only • 25.”
Why relevant

The MCQ statement explicitly asserts that 'Mobile telephone companies and supermarket chains that are owned and controlled by residents are eligible to be promoters of Payments Banks,' indicating this idea appears in standard study material.

How to extend

A student could treat this as a claim to verify by consulting the original RBI Payments Bank promoter-eligibility list or the official guidelines to confirm whether supermarket chains are named.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Payments Banks > p. 190
Strength: 5/5
“The guidelines for Payments Banks provide the following: • Eligible promoters can be non-bank Prepaid Payment Instrument (PPI) issuers and (i)other entities like mobile telephone companies, etc.• Shall primarily accept demand deposits up to maximum balance of \bar {\tau}1,00,000 per (ii)individual customer.• Can issue ATM/Debit Cards, payments and remittance services. (iii)• (iv) Maintain CRR with the RBI on its outside Demand and Time Liabilities and invest at least 75 per cent of its 'demand deposit balances' in SLR eligible G-Secs/Treasury Bills Examples of Payments Bank include India Post Payments Bank, Airtel Payments Bank, Paytm Payments Bank.”
Why relevant

RBI guidelines excerpt states eligible promoters include 'other entities like mobile telephone companies, etc.' and gives examples of payment banks (Airtel Payments Bank), showing telcos are explicitly included and 'etc.' may imply other non-bank entities.

How to extend

A student could interpret 'etc.' as a category that might cover large retail chains and then check RBI's detailed promoter categories or licensing circulars to see if supermarket chains are listed.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 21. Payment Banks: > p. 87
Strength: 3/5
“• In August 2015, RBI granted license to 11 applicants for Payment Banks.• RBI has put a cap of Rs. 2 lakhs on deposits that payment banks can receive from individual customers. This restriction will allow only those companies to seek for payment bank licenses who are really interested in targeting the poor. Hence, the main target for payment banks will be migrant labourers, self-employed, low-income households etc. as they will offer low-cost savings accounts and remittance services so that those who now transact only in cash can take their first step into the formal banking system (payment banks will not be allowed to lend and issue credit cards.”
Why relevant

Examples of payment banks (India Post, Airtel, Paytm) include non-bank players and a telecom firm, illustrating that non-traditional financial-sector firms have been granted payment-bank licenses.

How to extend

A student could compare the business models of these approved promoters (e.g., Airtel) with supermarket chains to assess whether supermarket chains meet similar criteria (resident ownership, business scope) required by RBI.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 10.Oversight of payment and settlement systems > p. 70
Strength: 3/5
“The Reserve Bank has since authorised various types of payment system operators, some of which are mentioned below: • 1. Financial Market Infrastructure (Clearing Corporation of India)• 2. Retail Payment (National Payment Corporation of India)• 3. Card Payment Network (MaserCard, VISA)• 4. Prepaid Instruments (AmazonPay)• 5. Cross Border Money Transfer (UAE Exchange Centre) National Payments Corporation of India (NPCI) is a non-bank payment system operator authorized by RBI to operate the following payment systems under the PSS Act 2007. • National Financial Switch• Immediate Payment System (IMPS)”
Why relevant

The list of authorized retail payment operators includes 'Prepaid Instruments (AmazonPay)', showing large retail/e‑commerce players can operate payment-related services under RBI oversight.

How to extend

A student could reason that if e‑commerce/retail players operate payment instruments, supermarket chains might analogously qualify as promoter-type non-bank entities, and then verify via RBI promoter eligibility text.

Statement 3
Are Payment Banks in India permitted by the Reserve Bank of India to issue credit cards?
Origin: Direct from books Fairness: Straightforward Book-answerable
From standard books
Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 21. Payment Banks: > p. 87
Presence: 5/5
“• In August 2015, RBI granted license to 11 applicants for Payment Banks.• RBI has put a cap of Rs. 2 lakhs on deposits that payment banks can receive from individual customers. This restriction will allow only those companies to seek for payment bank licenses who are really interested in targeting the poor. Hence, the main target for payment banks will be migrant labourers, self-employed, low-income households etc. as they will offer low-cost savings accounts and remittance services so that those who now transact only in cash can take their first step into the formal banking system (payment banks will not be allowed to lend and issue credit cards.”
Why this source?
  • Explicit statement that payment banks 'will not be allowed to lend and issue credit cards'.
  • Directly links RBI licensing/permission for Payment Banks to the prohibition on issuing credit cards.
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Payments Banks > p. 191
Presence: 5/5
“The Second Small Finance Banks | Payments Banks • Can accept all types of deposits like a Commercial Bank (Current Account, Savings Account, Fixed Deposit, Recurring Deposit, etc.). Take deposit only on Current Account, Savings Account and cannot accept Fixed Deposits (FD). They also cannot issue Credit Card but can issue a Debit Card. • They can give out depositor's money as loans to other customers, but have small area of operation. They cannot give depositor's money as loans.”
Why this source?
  • Clearly contrasts Payment Banks with others by stating 'They also cannot issue Credit Card but can issue a Debit Card.'
  • Provides an unambiguous prohibition on credit-card issuance by Payment Banks.
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Payments Banks > p. 190
Presence: 4/5
“The guidelines for Payments Banks provide the following: • Eligible promoters can be non-bank Prepaid Payment Instrument (PPI) issuers and (i)other entities like mobile telephone companies, etc.• Shall primarily accept demand deposits up to maximum balance of \bar {\tau}1,00,000 per (ii)individual customer.• Can issue ATM/Debit Cards, payments and remittance services. (iii)• (iv) Maintain CRR with the RBI on its outside Demand and Time Liabilities and invest at least 75 per cent of its 'demand deposit balances' in SLR eligible G-Secs/Treasury Bills Examples of Payments Bank include India Post Payments Bank, Airtel Payments Bank, Paytm Payments Bank.”
Why this source?
  • Specifies permitted card instruments for Payment Banks: 'Can issue ATM/Debit Cards', implying absence of credit-card permission.
  • Describes other regulatory features (deposit cap, investment rules) that frame limited scope of Payment Banks' activities.
Statement 4
Are Payment Banks in India permitted by the Reserve Bank of India to issue debit cards?
Origin: Direct from books Fairness: Straightforward Book-answerable
From standard books
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Payments Banks > p. 190
Presence: 5/5
“The guidelines for Payments Banks provide the following: • Eligible promoters can be non-bank Prepaid Payment Instrument (PPI) issuers and (i)other entities like mobile telephone companies, etc.• Shall primarily accept demand deposits up to maximum balance of \bar {\tau}1,00,000 per (ii)individual customer.• Can issue ATM/Debit Cards, payments and remittance services. (iii)• (iv) Maintain CRR with the RBI on its outside Demand and Time Liabilities and invest at least 75 per cent of its 'demand deposit balances' in SLR eligible G-Secs/Treasury Bills Examples of Payments Bank include India Post Payments Bank, Airtel Payments Bank, Paytm Payments Bank.”
Why this source?
  • Explicitly states Payments Banks 'Can issue ATM/Debit Cards' in the guidelines summary.
  • Snippet is a guidelines summary describing permitted services of Payments Banks (authoritative context).
  • Also lists Payments Bank examples, indicating practical application of the rule.
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Payments Banks > p. 191
Presence: 5/5
“The Second Small Finance Banks | Payments Banks • Can accept all types of deposits like a Commercial Bank (Current Account, Savings Account, Fixed Deposit, Recurring Deposit, etc.). Take deposit only on Current Account, Savings Account and cannot accept Fixed Deposits (FD). They also cannot issue Credit Card but can issue a Debit Card. • They can give out depositor's money as loans to other customers, but have small area of operation. They cannot give depositor's money as loans.”
Why this source?
  • Clearly contrasts credit-card restriction with allowance: 'cannot issue Credit Card but can issue a Debit Card.'
  • Directly affirms debit-card issuance capability for Payments Banks.
Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 21. Payment Banks: > p. 87
Presence: 4/5
“• In August 2015, RBI granted license to 11 applicants for Payment Banks.• RBI has put a cap of Rs. 2 lakhs on deposits that payment banks can receive from individual customers. This restriction will allow only those companies to seek for payment bank licenses who are really interested in targeting the poor. Hence, the main target for payment banks will be migrant labourers, self-employed, low-income households etc. as they will offer low-cost savings accounts and remittance services so that those who now transact only in cash can take their first step into the formal banking system (payment banks will not be allowed to lend and issue credit cards.”
Why this source?
  • States Payments Banks 'will not be allowed to lend and issue credit cards', which implicitly distinguishes credit-card prohibition from other card services (i.e., debit/ATM cards).
  • Supports the regulatory framing of permitted vs prohibited activities for Payments Banks.
Statement 5
Are Payment Banks in India prohibited from undertaking lending activities under Reserve Bank of India regulations?
Origin: Direct from books Fairness: Straightforward Book-answerable
From standard books
Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 21. Payment Banks: > p. 87
Presence: 5/5
“• In August 2015, RBI granted license to 11 applicants for Payment Banks.• RBI has put a cap of Rs. 2 lakhs on deposits that payment banks can receive from individual customers. This restriction will allow only those companies to seek for payment bank licenses who are really interested in targeting the poor. Hence, the main target for payment banks will be migrant labourers, self-employed, low-income households etc. as they will offer low-cost savings accounts and remittance services so that those who now transact only in cash can take their first step into the formal banking system (payment banks will not be allowed to lend and issue credit cards.”
Why this source?
  • Explicit statement that 'payment banks will not be allowed to lend and issue credit cards.'
  • Context lists RBI licensing and specific restrictions (deposit cap) for Payment Banks, reinforcing regulatory limits on activities.
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Payments Banks > p. 190
Presence: 3/5
“The guidelines for Payments Banks provide the following: • Eligible promoters can be non-bank Prepaid Payment Instrument (PPI) issuers and (i)other entities like mobile telephone companies, etc.• Shall primarily accept demand deposits up to maximum balance of \bar {\tau}1,00,000 per (ii)individual customer.• Can issue ATM/Debit Cards, payments and remittance services. (iii)• (iv) Maintain CRR with the RBI on its outside Demand and Time Liabilities and invest at least 75 per cent of its 'demand deposit balances' in SLR eligible G-Secs/Treasury Bills Examples of Payments Bank include India Post Payments Bank, Airtel Payments Bank, Paytm Payments Bank.”
Why this source?
  • Guidelines enumerate permitted functions (accept deposits up to a limit, issue ATM/debit cards, maintain CRR, invest major portion in SLR securities) without listing lending as an activity.
  • Specifies structural/operational constraints (deposit limit, investment in G-Secs) that align with a non-lending model.
Pattern takeaway: UPSC loves 'Negative Covenants'. If a new institution is created, the examiner will immediately look for what it *cannot* do. Always memorize the exclusions (No lending, No CRR exemption, No foreign promoters beyond 74%, etc.) rather than just the inclusions.
How you should have studied
  1. [THE VERDICT]: Sitter. In 2016, this was headline news (Nachiket Mor Committee). Standard sources (Vivek Singh/Singhania) now cover the 'No Lending/No Credit Card' rule as a basic fact.
  2. [THE CONCEPTUAL TRIGGER]: Financial Inclusion & Banking Reforms. Specifically, the 'Differentiated Banking' license framework introduced by RBI.
  3. [THE HORIZONTAL EXPANSION]: Compare Payment Banks (PB) vs Small Finance Banks (SFB). PB: No lending, Max deposit ₹2 Lakh, 75% SLR requirement. SFB: Can lend, 75% Priority Sector Lending target. Promoters: Telcos, NBFCs, Supermarket chains, Corporate BCs.
  4. [THE STRATEGIC METACOGNITION]: When studying regulatory bodies or new institutions, create a 'Power & Restriction' table. UPSC rarely asks generic functions; they ask about the *boundaries* of power (e.g., 'Cannot issue credit cards').
Concept hooks from this question
📌 Adjacent topic to master
S1
👉 Eligible promoters for Payments Banks
💡 The insight

Directly addresses which types of entities (e.g., mobile telephone companies, non-bank PPI issuers) can promote Payments Banks under RBI guidelines.

High-yield for banking/regulatory questions: understanding eligible promoter categories helps answer licensing and ownership questions on Payments Banks and distinguishes them from other bank types. Connects to questions on financial inclusion and private sector participation. Learn by memorizing promoter categories and mapping to real examples (Airtel, Paytm).

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Payments Banks > p. 190
🔗 Anchor: "Are mobile telephone companies owned and controlled by residents eligible to be ..."
📌 Adjacent topic to master
S1
👉 Operational limits of Payments Banks
💡 The insight

RBI guidelines couple promoter eligibility with operational rules (deposit caps, inability to lend, ability to issue debit/ATM cards) that shape why certain promoters are targeted.

Important for UPSC questions that ask about scope and purpose of Payments Banks — knowing limits (deposit ceiling, no lending) explains policy intent (financial inclusion). Useful across ethics, GS III (banking) and case-based MCQs. Study by linking promoter rules to operational constraints and examples.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Payments Banks > p. 190
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 21. Payment Banks: > p. 87
🔗 Anchor: "Are mobile telephone companies owned and controlled by residents eligible to be ..."
📌 Adjacent topic to master
S1
👉 RBI's authorization and regulatory role in payment systems
💡 The insight

Payments Banks operate under RBI guidelines and the Payment and Settlement Systems Act, so promoter eligibility is set within RBI's regulatory framework.

Crucial for questions on institutional roles and legal frameworks; shows how RBI authorises and regulates payment systems, linking to broader topics like NPCI and the PSS Act. Prep strategy: map key statutes and RBI powers to specific entities (Payments Banks, NPCI) with examples.

📚 Reading List :
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 10.Oversight of payment and settlement systems > p. 70
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Payments Banks > p. 190
🔗 Anchor: "Are mobile telephone companies owned and controlled by residents eligible to be ..."
📌 Adjacent topic to master
S2
👉 Eligible promoters of Payments Banks
💡 The insight

RBI guidelines specify which types of non-bank entities can be promoters (e.g., non-bank PPI issuers and other entities such as mobile telephone companies).

Questions on licensing and promoter eligibility for new bank types (like Payments Banks) are frequently tested. Mastering which classes of entities qualify helps eliminate incorrect options and links to regulatory categories (PPI issuers, telecoms). Learn by mapping RBI guideline summaries and memorising canonical examples.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Payments Banks > p. 190
🔗 Anchor: "Are supermarket chains owned and controlled by residents eligible to be promoter..."
📌 Adjacent topic to master
S2
👉 Operational limits on Payments Banks (deposit cap, no lending, card issuance)
💡 The insight

Payments Banks have distinctive operational restrictions—maximum per-customer deposits, prohibition on lending, but ability to issue ATM/debit cards and provide remittance services—that define their business model and suitability of promoters.

High-yield for UPSC banking questions: knowing operational constraints helps reason why certain promoters (e.g., firms focused on payments) are preferred. Connects to questions on financial inclusion, bank types, and regulatory objectives. Memorise key limits (deposit cap, no credit issuance) and examples.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Payments Banks > p. 190
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 21. Payment Banks: > p. 87
🔗 Anchor: "Are supermarket chains owned and controlled by residents eligible to be promoter..."
📌 Adjacent topic to master
S2
👉 Purpose and target clientele of Payments Banks (financial inclusion)
💡 The insight

Payments Banks were created to promote financial inclusion and target low-income, migrant, and underserved customers—context that explains promoter selection and product restrictions.

Understanding policy intent (financial inclusion) is essential for analytical UPSC answers and for linking questions on committee recommendations (e.g., Nachiket Mor) to regulatory measures. Study the objective, target groups, and how product limits serve inclusion goals.

📚 Reading List :
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 21. Payment Banks: > p. 87
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 3: Money and Banking - Part II > 3.1 History of Indian Banking and Reforms > p. 128
🔗 Anchor: "Are supermarket chains owned and controlled by residents eligible to be promoter..."
📌 Adjacent topic to master
S3
👉 Core restrictions on Payment Banks
💡 The insight

References explicitly state Payment Banks cannot lend or issue credit cards and have deposit caps—central to answering whether they may issue credit cards.

High-yield for UPSC banking/regulatory questions: distinguishes Payment Banks' mandate and limits under RBI licensing. Frequently tested in comparisons of banking categories and in questions on financial inclusion policy. Prepare by memorising permitted vs. prohibited activities and the rationale (financial inclusion, limited-risk model).

📚 Reading List :
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 21. Payment Banks: > p. 87
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Payments Banks > p. 190
🔗 Anchor: "Are Payment Banks in India permitted by the Reserve Bank of India to issue credi..."
🌑 The Hidden Trap

Digital Banking Units (DBUs). Just as Payment Banks were the trend in 2016, DBUs are the current equivalent. Prediction: 'DBUs are distinct legal entities separate from their parent banks' (False, they are just specialized fixed-point business units of existing Scheduled Commercial Banks).

⚡ Elimination Cheat Code

Etymology Hack: The name is 'Payment' Bank, not 'Credit' Bank. Its core function is payments/remittances. A 'Credit Card' is essentially an unsecured loan (credit). Therefore, if it cannot lend (Statement 3), it logically cannot issue Credit Cards (Statement 2). This link eliminates options A and D instantly.

🔗 Mains Connection

Mains GS-III (Inclusive Growth): Payment Banks represent the shift from 'Brick and Mortar' banking to 'High Tech-Low Cost' banking. Use this as a case study for how technology (JAM Trinity) solves the 'Last Mile' problem where traditional branches failed.

✓ Thank you! We'll review this.

SIMILAR QUESTIONS

IAS · 2017 · Q79 Relevance score: 3.29

Consider the following statements : 1. National Payments Corporation of India (NPCI) helps in promoting the financial inclusion in the country. 2. NPCI has launched RuPay, a card payment scheme. Which of the statements given above is/are correct ?

IAS · 2010 · Q77 Relevance score: 1.89

With reference to India, Consider the following: 1. Nationalization of Banks 2. Formation of Regional Rural Banks 3. Adoption of villages by Bank Branches Which of the above can be considered as steps taken to achieve the “financial inclusion” in India.

CDS-I · 2018 · Q55 Relevance score: 0.59

Which of the following statements about the India Post Payments Bank (IPPB) is/are correct? 1. It has been incorporated as a Public Limited Company. 2. It started its operation by establishing two pilot branches at Hyderabad and Varanasi. Select the correct answer using the code given below.

IAS · 2003 · Q96 Relevance score: 0.48

Consider the following statements: 1. The maximum limit of shareholding of Indian promoters in private sector banks in India is 49 per cent of the paid up capital. 2. Foreign Direct Investment up to 49 per cent from all sources is permitted in private sector banks in India under the automatic route. Which to these statements is/are correct?

IAS · 2021 · Q35 Relevance score: 0.15

With reference to 'Urban Cooperative Banks' in India, consider the following statements : 1. They are supervised and regulated by local boards set up by the State Governments. 2. They can issue equity shares and preference shares. 3. They were brought under the purview of the Banking Regulation Act, 1949 through an Amendment in 1966. Which of the statements given above is/are correct?