Mumbai: Payment banks have urged the Reserve Bank of India (RBI) to reduce the statutory liquidity ratio (SLR) requirement by at least 10% from the current 75%, stating that a lower threshold would enable them to invest in higher-yielding instruments and improve their margins, two sources in the know said.
They have also requested regulatory approval to disburse loans and accept deposits of up to ₹5 lakh, up from the existing limit of ₹2 lakh. Payment banks are not permitted to engage in lending activities.
With multiple representations on these issues yet to receive a response from the central bank, the banks have now sought a meeting with the RBI governor to press their case.
"We are seeking relaxation on the entire payment banks model that includes treasury operations, loans and deposits," said the CEO of a payments bank. "We have made representations through the Payment Council of India and sought meetings with the RBI governor and deputy governors. The fresh requests have gone a fortnight ago."
The requests include giving payment banks a path to reduce SLR investments and allowing them to invest in longer-term securities.
"Our model puts significant restrictions on our margin growth, today if I take consumer deposits and 75% I have put in treasury bills, that is not yielding much," said another payment bank CEO. "If we can get to invest in longer-term instruments and deploy the money better, our margins should improve by at least 50 bps to 1%."
Payment banks in India are required to maintain an SLR of at least 75% of their demand deposit balances in government securities with a maturity of up to one year. The remaining 25% of demand deposit balances can be held in current or fixed deposits with other scheduled commercial banks.
India Post Payments Bank, Airtel Payments Bank and Fino Payments Bank are the most active in this space. Fino has also applied for a small finance bank licence with the RBI. The last reported net interest margin (NIM) of the lender was around 2.5%. Other operational payment banks include Jio Payments Bank, Paytm Payments Bank and NSDL Payments Bank.
The representations made to the regulator also ask for lifting the ban on disbursing loans and for permission to offer small-ticket loans of up to ₹5 lakh. Payment banks also want the regulator to relax the cap on collecting deposits to ₹5 lakh. Under the RBI's differentiated licensing rules, payment banks can only collect ₹2 lakh per customer in their savings bank accounts. They are not allowed to collect fixed or recurring deposits.
They have also requested regulatory approval to disburse loans and accept deposits of up to ₹5 lakh, up from the existing limit of ₹2 lakh. Payment banks are not permitted to engage in lending activities.
With multiple representations on these issues yet to receive a response from the central bank, the banks have now sought a meeting with the RBI governor to press their case.
"We are seeking relaxation on the entire payment banks model that includes treasury operations, loans and deposits," said the CEO of a payments bank. "We have made representations through the Payment Council of India and sought meetings with the RBI governor and deputy governors. The fresh requests have gone a fortnight ago."
The requests include giving payment banks a path to reduce SLR investments and allowing them to invest in longer-term securities.
"Our model puts significant restrictions on our margin growth, today if I take consumer deposits and 75% I have put in treasury bills, that is not yielding much," said another payment bank CEO. "If we can get to invest in longer-term instruments and deploy the money better, our margins should improve by at least 50 bps to 1%."
Payment banks in India are required to maintain an SLR of at least 75% of their demand deposit balances in government securities with a maturity of up to one year. The remaining 25% of demand deposit balances can be held in current or fixed deposits with other scheduled commercial banks.
India Post Payments Bank, Airtel Payments Bank and Fino Payments Bank are the most active in this space. Fino has also applied for a small finance bank licence with the RBI. The last reported net interest margin (NIM) of the lender was around 2.5%. Other operational payment banks include Jio Payments Bank, Paytm Payments Bank and NSDL Payments Bank.
The representations made to the regulator also ask for lifting the ban on disbursing loans and for permission to offer small-ticket loans of up to ₹5 lakh. Payment banks also want the regulator to relax the cap on collecting deposits to ₹5 lakh. Under the RBI's differentiated licensing rules, payment banks can only collect ₹2 lakh per customer in their savings bank accounts. They are not allowed to collect fixed or recurring deposits.
