MUMBAI: The Reserve Bank of India plans to announce the final norms on small and payments banks next month. It’s a move that could eventually widen the number of players in the Indian banking sector, reports TNN.

RBI had come out with draft guidelines for this new payment system earlier and had invited comments by August 28. According to Mundra, there is no need worry to about the profitability for such banks, as they can earn from a variety of avenues like charging for transactions and through investments in government bonds. These small banks can even provide a whole suite of basic banking products such as deposits and supply of credit, but within a limited scope.

In addition to that, the payments banks would offer a limited range of products such as demand deposits and remittances. Particularly in remote areas, they would have a widespread network of access points either through their own branch network or through business correspondents or through networks provided by others.

The central bank had debated the idea of small banks and payments banks to get more people under the formal financial system. “We have received comments on the discussion paper,” RBI deputy governor SS Mundra said.

To deepen the financial inclusion process, and help more people under the formal financial system, the RBI has mooted the idea of small banks and payments banks.

These final norms once released by the RBI would allow micro-lenders, telecom players, non-banking finance companies and public sector companies eligible to apply for licenses.