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.
- (a) 1 and 2 only
- (b) 1 and 3 only ✓ UPSC's answer
- (c) 2 only
- (d) 1, 2 and 3
Why the answer is (b)
• RBI's 2014 guidelines allow non-bank PPI issuers, telecom companies, supermarket chains, corporates and cooperatives owned and controlled by residents to promote Payment Banks (statement 1) — Airtel, Paytm and India Post received licences.
• Statement 3 is correct: Payment Banks cannot lend; they accept deposits (now up to ₹2 lakh) and invest in government securities.
• Statement 2 is wrong: they can issue debit cards and ATM cards but not credit cards, since they cannot extend credit.
• Hence 1 and 3 only, option (b).
Why the other options are wrong
- (a) 1 and 2 only
- Statement 2 is wrong: no credit cards.
- (c) 2 only
- Statement 2 is wrong; statements 1 and 3 are correct.
- (d) 1, 2 and 3
- Statement 2 is wrong.
Asked in the GS Paper I of the UPSC Civil Services Preliminary Examination 2016, held on 7 August 2016. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.