Payment banks will reduce cost of access to banking system: RBI Governor Raghuram Rajan

Mumbai: The Reserve Bank of India’s Governor Raghuram Rajan Thursday commented on the payment banks, calling them “one of the most exciting space for the banking system”.

Raguram rajan

He said that the financial services segment was seeing a tremendous amount of churn and competition.

He said that the RBI may issue licences for small banks next month.

In conversation with State Bank of India’s Chairman Arundhati Bhattacharya, he attempted to debunk worries held by universal banks with regard to payment banks.

He said that payment banks aren’t a threat to universal banks, adding that universal banks can do everything payment banks can. Rather, payment banks will serve as feeders to universal banks.

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As payment banks will mostly be set up in rural areas, in a bid to bring the unbanked into the banking hemisphere, Rajan said that payment banks will serve to reduce the cost of access to the banking system.

Input with agency