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Payments Bank model to advance small loans to borrowers

July 01, 2022

Payments Bank model to advance small loans to borrowers
The Reserve Bank of India (RBI) must now think of allowing Payments Banks to advance small loans to borrowers from their own books, Fino Payments Bank Managing Director Rishi Gupta says. 

Gupta was speaking to Moneycontrol on June 30 in the context of RBI guidelines that do now allow Payments Banks to give loans; they are allowed to accept deposits of up to ₹2 lakh. 

“If small, micro-lending is allowed,  Payments Banks will become a better, full-fledged model without the requirement of conversion to an SFB (Small Finance Bank). It has been seven years since RBI issued guidelines in 2015,” Gupta said. 

Payments Banks are required to be licensed as small finance banks for them to give loans, access more deposits, and boost their profitability. 

“Today we have more data points, information reports by credit bureaus, KYC (Know Your Customer) improvements have happened…it may be good if RBI can review the Payments Bank guidelines and within the framework, if they give more freedom, it will become better,” Gupta said.

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