ItzCash, a prepaid payments solution provider, will apply to the Reserve Bank of India for a payments bank licence, it’s Managing Director Naveen Surya said.
“We will definitely apply for a payments bank licence,” Surya said when asked if ItzCash Cards will participate in the process.
The RBI on November 27 issued guidelines for two new types of banks — payments and small finance banks.
The objective of allowing these two categories of banks is to provide basic banking facilities to millions of un-banked citizens.
A payments bank will offer small savings account where people can deposit up to ₹1 lakh . It cannot, however, lend money or issue credit cards. The RBI will accept applications for payments bank till January 16 next year.
The minimum paid-up capital for a payments bank has been pegged at ₹100 crore.
Customer base Surya said ItzCash had in the last eight years issued as many as 80 million prepaid instruments. This company has about 25-30 million customers buying its prepaid product every year.
If it gets a payments bank licence, the strategy would not be to offer a savings bank account to every customer who walks into its nearly one lakh touch-points across the country, according to Surya.
“We will offer savings bank account only to those who we feel this product could be relevant and meet their need,” Surya said, adding this could mean that only about 25 per cent of its existing prepaid customers may be roped in as savings bank customers.
One of the shortcomings of the Jan Dhan Yojana is the wrong notion of policymakers that providing a bank account alone to the un-banked will be enough and a “game changer”.
“Providing a savings bank alone will not change his life. Other services to meet his needs have to be provided — like remittance, direct benefit transfer, etc.,” Surya added.
Given the increase in living expenses and runaway inflation, the level of savings has reduced for most Indians in recent years.
According to Census 2011, 40 per cent of India’s households are un-banked.