Jio Payments Bank Limited commences operations; all you want to know in brief

Reserve Bank of India (RBI) on Tuesday said that the Jio Payments Bank Limited has commenced its operations in India. Jio Payments Bank, a payment bank venture of Reliance Industries, has started working from April 3, 3018. The central bank in a statement said, "Jio Payments Bank Limited has commenced operations as a payments bank with effect from April 3, 2018. The Reserve Bank has issued a licence to the bank under Section 22 (1) of the Banking Regulation Act, 1949 to carry on the business of payments bank in India."

In the statement, the central bank says, "Reliance Industries Limited, Mumbai was one of the 11 applicants which were issued an in-principle approval for setting up a payments bank, as announced in the press release on August 19, 2015."

Find below name of the 11 applicants who were granted the in-principle approvals to set up payments banks under the Guidelines for Licensing of Payments Banks issued on November 27, 2014 

Aditya Birla Nuvo Limited
Airtel M Commerce Services Limited
Cholamandalam Distribution Services Limited
Department of Posts
Fino PayTech Limited
National Securities Depository Limited
Reliance Industries Limited
Shri Dilip Shantilal Shanghvi
Shri Vijay Shekhar Sharma
Tech Mahindra Limited
Vodafone m-pesa Limited

Here know about other payment banks that are operational since getting approval from the RBI

• In November 2016, Bharti Airtel was the first company to begin payment bank services. 
• In May 2017, Paytm Payments Bank promoted by Paytm founder Vijay Shekhar Sharma became operational. 
• In June 2017, Fino Payments Bank Limited started its operation across the country. 
• On February 22, 2018, the list of Payments Bank was joined by Aditya Birla Idea Payments Bank.
• On the other hand, the Department of Posts, which also got a license for a payment bank is yet to start its services formally, who is running services on pilot basis currently.

Let's know about the process of selection of these payments banks 
At the first stage, a detailed scrutiny of the applicants was undertaken by an External Advisory Committee (EAC) under the Chairmanship of Dr Nachiket Mor, Director, Central Board of the Reserve Bank of India. 
The recommendations of the EAC were an input to an Internal Screening Committee (ISC), consisting of the Governor and the four Deputy Governors. Later, this ISC prepared the final list of recommendations for the Committee of the Central Board (CCB), after independently scrutinising all the applications. 

At its meeting on August 19, 2015, the CCB went through the applications, informed by the recommendations of the EAC and the ISC, and approved the announced list of applicants.

In arriving at the final list, the CCB noted that it would be difficult at this stage to forecast the most successful likely model in the emerging business of payments. The CCB further noted that payments banks cannot undertake to lend, and therefore believed that the payments bank would not be subject to the same risks as a full-service bank. 

Therefore, the CCB evaluated applicants to assess whether there would be an unacceptable risk even to the narrower functions of a payments bank. 

After this, the CCB selected entities with experience in different sectors and with different capabilities so that different models could be tried. It did ensure that all the selected applicants have the reach and the technological and financial strength to service hitherto excluded customers across the country. 

Nevertheless, the in-principle approvals are subject to the condition {(15 (v)} in the guidelines, including any developments in on-going cases.

Details of “in-principle” approval
The “in-principle” approval granted will be valid for a period of 18 months, during which time the applicants have to comply with the requirements under the Guidelines and fulfil the other conditions as may be stipulated by the Reserve Bank.

On being satisfied that the applicants have complied with the requisite conditions laid down by it as part of “in-principle” approval, the Reserve Bank would consider granting to them a licence for the commencement of banking business under Section 22(1) of the Banking Regulation Act, 1949. Until a regular licence is issued, the applicants cannot undertake any banking business.