Payments Banks: A New Dimension to Boost Financial Inclusion

The unbanked segment of India is exposed to the risk of unsecured payment and remittances. The irony of this situation is that this segment is not even capable of bearing the risk. People from small villages and remote areas are moving towards towns for better employment opportunities and striving hard to sustain their livelihoods. Most of the individuals in this segment are depending upon informal channels to transferring their money to their families located in remote areas. Therefore, a need was identified to cater to the banking requirements of this segment such as small businesses, low-income households, and other unorganized sector entities. The Reserve Bank of India (RBI) has taken various steps for achieving the objective of financial inclusion and introduced Payment Banks recently to reach out to the unbanked areas. This paper tries to educating the central bank's regulations/framework of payment banks as a new dimension to boost the financial inclusion in India.