The Reserve Bank of India is likely to come out with final norms on small and payments banks in a month, RBI Deputy Governor S.S. Mundra said today.

"We have received comments (on discussion paper).... Soon, in a month or so, RBI will come out with final guidelines on small and payment banks," he said addressing students from the NMIMS in Mumbai.

The banking regulator had come out with draft guidelines earlier and had invited comments by August 28.

In order to deepen the financial inclusion programme and bring more unbanked people under the formal financial system, RBI had mooted the idea of small and payments banks.

Mundra sought to dismiss concerns on the profitability of such banks, saying they can earn from a variety of avenues such as charging for transactions and through investments in Government bonds, which is allowed.

Once released, the final norms will allow micro-finance institutions (MFIs), telecom players, non-banking finance companies (NBFCs) and public sector companies eligible to apply for bank licences.

The proposed small banks will provide a whole suite of basic banking products such as deposits and supply of credit, but in a limited area of operation unlike a full-fledged bank.

Payments banks will offer a limited range of products such as acceptance of demand deposits and remittances of funds. They will have a widespread network of access points, particularly in remote areas, either through their own branch network or through Business Correspondents (BCs) or through networks provided by others.

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