The principle behind payments banks is simple –
Accelerating the penetration of financial services among low-income consumers by leveraging technology and the large, non-banking retail network without compromising the security of the financial sector.
With the Reserve Bank of India (RBI)’s in-principle approval to 11 payments banks, India has taken one big step forward on the road laid out seven years ago.
Challenges, if any?
A recent Consultative Group to Assist the Poor report titled Doing Digital Finance Right concluded that low-income consumers are hesitant to adopt digital modes for financial transactions due to:
- Inability to transact due to network/service downtime
- Insufficient agent liquidity or float, which also affects ability to transact
- User interfaces that many find complex and confusing
- Poor customer recourse for grievances and queries
- Non-transparent fees and other terms
- Fraud that targets customers
- Inadequate data privacy and protection